The Reinvestment Fund for Sustainable Capital Expenditure (RFSC) is not Share Capital

This concerns the views of some quarters that Member Consumer Owners (MCOs) of BENECO need not pay their share capital anymore since they have been paying the Reinvestment Fund for Sustainable Capital Expenditure (CAPEX) which is part of their monthly electric bill.

BENECO understands the said position but unfortunately, the Energy Regulatory Commission (ERC), the government body that regulates power rates, has ruled that the RFSC cannot be used for other purposes other than for CAPEX projects.

(1) On Dec. 1, 2020, BENECO wrote Atty. Agnes Devanadera, ERC Chairperson, if the RFSC paid by MCOs can be converted as equity or share contribution. The question was raised following BENECO's registration with the Cooperative Development Authority (CDA) in Nov. 2020. The letter was sent after BENECO and the Technical Working Group that drafted BENECO's Articles of Cooperation agreed to seek final ruling from the ERC. BENECO then was inclined to recognize the RFSC a share contribution but it had to seek ERC's approval.

(2) On Feb. 9, 2021, the ERC replied to BENECO and said:

"The RFSC may not be used for other purpose other than the CAPEX or such other project that the ERC may approve and only when a member consumer terminates a contract with the EC may the RFSC be converted into a members' share capital provided that the EC is already registered under the CDA the time of the termination of the contract by the member consumer."

(3) The ERC based its ruling on ERC Resolution No. 14 Series of 2011 which says that the RFSC:

"(1) Shall be used solely for CAPEX or any other projects approved by the ERC and not for any other purpose, even on temporary bases.
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(4) If the member consumer terminates his contract with the EC, the said contribution shall not be withdrawn instead the same shall be treated as contribution in aid of construction (CIAC). In case of ECs registered under the CDA, the said member contribution shall be converted into member's share capital."

(4) The ERC said that "it would therefore be contrary to the above issuance if the RFSC of a CDA registered cooperative will be applied or converted to a member's share capital upon the cooperative's registration with the CDA."

(5) This ERC ruling prompted BENECO to decide to collect the minimum share capital of P500.00 from every MCO which is separate and distinct from the electric bill paid every month. The MCOs approved the collection of the share capital during the Annual General Membership Assembly (AGMA) on October 2, 2021. The collection of share capital is required for cooperatives registered with the Cooperative Development Authority (CDA). The CDA - Cordillera Administrative Region has publicly declared on several occasions that BENECO has the right to collect share capital.

We are calling on our MCOs to pay their share capital of P500.00 which is the required minimum contribution as per our CDA approved Articles of Cooperation and By Laws. Please pay at our collection centers located at:

(1) BENECO Headquarters, South Drive, Baguio City
(2) Maharlika Livelihood Complex, Baguio City
(3) Bonuan Condominium, Barangay Salud Mitra, Baguio city
(4) BENECO Bldg., Km. 4, La Trinidad, Benguet
(5) BENECO Bldg., Bekes, Buyacaoan, Buguias

You can also pay to our authorized collection agents in the various barangays in Baguio City and Benguet. Please ask for your official receipt.

Thank you

signed
Melchor S. Licoben
General Manager