Beneco clarifies issues anew

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Wednesday, March 19, 2014

BENGUET Electric Cooperative officials pacified concerns of a rate increase and power shortage during the summer months.

Beneco legal counsel Delmar Cariño and corporate services manager Brenda Carling appeared before the City Council Monday to explain concerns of local legislators on rate increase especially in the coming summer months.

"Barring any acts of god that would affect generation charges or the current power supply we believe we will not have a shortage of supply this coming summer and that we have a secure bilateral contract with our power supplier," Cariño told Councilor Elmer Datuin who sought answers on concerns for power supply in the summer months.


Meantime, Cariño explained there are three reasons for a possible increase in power rates.

First, is when generation charges of power producers increase; second, if the power utility imports certain equipment and materials; and third, if prices in the wholesale electricity spot market increase as well.

Citing Meralco as example, prices in December for generation charge increased by as much as more than P3 per kilowatt hour while Beneco only increased by P0.26 per kilowatt hour while in January the increase was only at three centavos.

This he explained is because Beneco has a lower generation charge from its supplier Team Energy compared to Meralco.

In the case of Beneco, Carino stressed there is no reason to fear sudden, unexplainable increase in rates or shortage in supply saying they are confident power supplier Team Energy will be able to deliver the needed 60 to 70 megawatts per month to serve some 130,000 consumers of Beneco.

“The generation charges are always going up and down but we assure that this will not be resulting in rates that will be a burden to the consumer,” Cariño stressed.

The Beneco legal counsel came up with a presentation before the City Council to explain the power industry composed of the generation, transmission and distribution utility sectors particularly the unbundled rates present in the bill of a consumer.

The generation charge, which is volatile and being passed-on and automatically charged to consumers could only be affected by certain factors such as increased demand and maintenance of power plants, reason why these charges vary every month.

“The function of the electric cooperative is to compute this through an ERC approved formula which we call as automatic generation rate adjustment. With 60 percent of the bill going to generation charge it really plays a factor in the bill that reaches the consumer,” he said.

Since Beneco has a different power supplier and volume demand compared to Meralco, the local power utility will not face the same predicament as the Metro Manila power distributor, Cariño stressed.

A comparison of rates also show Beneco has the lowest rate per kilowatt hour at only around P8/ kilowatt hour compared to other provinces in the Cordillera region with rates ranging from P9-P11/ kilowatt hour.

Aside from generation charges, the Beneco official also explained the basis for charging Value Added Tax including the systems loss, which are mandated by existing laws.

According to Cariño, they are only charging taxes based on the mandate of the EPIRA and only act as collection officers on behalf of the Bureau of Internal Revenue.

Moreover, he stressed if the distributor does not have a good power supply contract and misplaces its card in trading in the WESM, the generation charge will definitely increase.

But Beneco is always on alert for these increases through proper forecasting so as not to overburden the consumer, Carino assured.
Meanwhile, Councilor Betty Lourdes Tabanda pointed out the need for the power utility to lower or cut down on its expenditures to at least lower operating cost and further reduce the rates charged to the consumers.

But Cariño stressed they are undergoing stringent budget deliberations where unnecessary expenses are purged while subject to audit by the National Electrification Administration on its administrative processes and the Energy Regulatory Commission on rates among others.

Published in the Sun.Star Baguio newspaper on March 20, 2014.

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