BENECO looking for ways to lower electric bill rates
Member-consumers may expect a higher amount in their electric bills in the coming months until the first quarter of 2022 due to the increasing power generation costs, which have become volatile due to the Covid-19 pandemic.
Engr. Melchor Licoben, Benguet Electric Cooperative Board of Directors-appointed general manager, told the city council last week Beneco is doing its best to come up with ways to mitigate the increasing electricity rates which member-consumers started to shoulder since August.
Licoben said they are negotiating with Team Energy Phils., the company that supplies Beneco’s energy requirements, its existing contract to come up with a fixed rate of generation cost to stem further increases during the period caused by the continuous increase of coal prices in the market being used by the supplier in power generation.
He explained that what affected the recent adjustment is the generation cost, which is the cost member-consumers pay to Beneco as distribution utility, which in return pays to the power supplier, meaning the generation cost is a pass-through charge or passed on to consumers via Beneco.
The increase in the generation cost from the previous P3.80 to P3.85, to P5 and recently P5.20 is fueled by the higher price of coal in the market, which is now around $150 to $173 per metric ton.
In Beneco’s contract with Team Energy starting 2016, the generation cost will be at P3.80 to P3.85 if the coal price remained within the $66 to $120/MT range or bandwidth.
The price remained and even dipped when the pandemic hit, which resulted in lower power rates that were reflected in Beneco consumers’ bills last year.
That protection or assurance of having a stable generation cost, however, was removed when coal prices shot up and breached the bandwidth when economies slowly reopened and demand for coal eventually increased.
Licoben said based on projections, coal market prices may continue increasing and remain to be high until the first quarter of 2022.
“If projections are correct, after that it will start to stabilize. So we are expecting a very volatile price of the generation component of our electric bill until 2022,” Licoben said in answer to the question of Councilor Michael Lawana whether the current rate adjustment is temporary.
The city council, through Lawana’s motion approved a resolution urging Beneco to negotiate with its supplier and consider adjusting the other charges in order to offset the increasing generation costs.
Aside from generation cost which makes up 50 to 60 percent of the total electric bill, other components of the bill are the distribution, supply and metering (DSM) cost, transmission cost, and other charges. The latter two are also mostly pass-through charges.
Licoben said there is no increase in the DSM cost, which Beneco charges for its day-to-day operations, which has not increased since 2012.
He said an adjustment in the DSM cost is in fact long overdue based on Beneco’s latest calculations, but Licoben said they have yet to make the request to the Energy Regulatory Commission.
“We understand the plight of every member-consumer. For any single centavo that will adjust the rates, we expect resistance from them, reason why since 2012 we have not requested for adjustment in our DSM. What we do is we try to maximize the amount of DSM that we collect to continue our day-to-day operations. On the other hand, it will be difficult to reduce the DSM cost because it will impact on our operations,” Licoben said.
In their ongoing talks with Team Energy, he said they are hoping to come up with a fixed generation cost acceptable to both Beneco and the power supplier to be able to stabilize or lower the passed-on charge.
“Nobody among Beneco and Team Energy expected the pandemic to come. We never factored in the impact of this virus when we entered into a contract. So we are hoping to agree to fix the cost of generation cost in the interim while the price of coal is volatile so that every month our electricity bills do not have to increase,” Licoben said.
Aside from the increase in the generation cost, there has also been an adjustment in the transmission cost last month when ancillary services charged by the National Grid Corporation of the Philippines increased, as well as the continuing implementation of the Incremental Currency Exchange Rate Adjustment or ICERA as per ERC order. – Hanna C. Lacsamana