August Increase in Rates

BENECO’s rates up as coal price breach supply contract

The Benguet Electric Cooperative (BENECO) is experiencing a rather odd and unforeseen increase in its power rates this year that has compelled its member consumers to pay more compared to 2020.

For this month’s billing alone, residential consumers consuming more than 46 kWh will pay P9.4007 per kilowatt hour (kwh) which means that for a household that will consume 100 kwh, it will have to pay P940.00.

The rate in July and June was P8.5989 and P8.4918 per kwh, respectively. Starting in February this year, the bill has increased by an average of P0.2232 per kwh.

The uptick was traced mainly to the increase in generation cost, referring to the component of the monthly bill used to pay Team Energy, the power generation company that supplies electricity to BENECO’s more than 140,000 consumers.

BENECO and Team Energy’s power supply agreement requires BENECO’s consumers to pay a generation cost P3.85/kwh from January to June and P3.80/kwh from July to December for as long as the price of coal is within the bandwidth US $66 per metric ton (MT) to US $123/MT.

The electric cooperative passed on to its member consumers very low generation cost for more than three quarters last year as the coal price went lower than $66 per MT when the global demand for electricity dropped as a result of the Covid-19 pandemic.

Engr. Melchor S. Licoben, General Manager Officer-in-Charge, said the revival of businesses activities that hit rock bottom during the lockdown period caused a sudden surge in the demand for electricity, pushing sky high the price of coal in the global market.

“We have a very favorable power supply agreement with Team Energy since it guaranteed our customers a least cost generation for as long as the agreed bandwidth on the price of coal is not breached.”

Member consumers will also have to pay two additional line items in their bill beginning this August – the payment of P0.0696 per kwh for Incremental Currency Exchange Rate Adjustment (ICERA) and P0.1948 for Generation Rate Adjustment Mechanism (GRAM), both inclusive of value added tax (VAT).

The ICERA covers changes in the foreign exchange rate while the GRAM is an adjustment for fuel costs seeks to absorb changes in fuel costs.

The Energy Regulatory Commission (ERC) has directed BENECO to collect the adjustment charges pursuant to the ERC’s regulatory decisions in the cases that covered the 16th to 17th ICERA test period and the 10th to 17th GRAM test period.

The additional dues, however, will only affect the consumers of July, 2009 to April, 2010 for the ICERA and the consumers for January, 2007 to April, 2010 for the GRAM.

Rowina Damian, BENECO’s rate officer, said that apart from the generation cost, the transmission charge for August, 2021 also increased by P0.1138/kWh due to the increase in the cost of ancillary services charges.

The ancillary charges are remitted to the National Grid Corporation of the Philippines (NGCP), the franchise holder of the country’s transmission grid.

“But the distribution, supply and metering charges has remained. These are the charges that BENECO collects for its operational expenses,” she said.

Licoben said consumers will surely rant over the timing of the rate increase.

“We do not want to burden our consumers but the reasons are beyond our control since we have no way to stop the increase in coal prices and we too cannot defy an ERC order. We ask for their understanding,” he said.

Licoben stressed that none of the increases in the generation and transmission charges are kept by BENECO.