February 27, 2024

Consumers of Benguet Electric Cooperative are now paying less than P0.0113 per kilowatt hour (kWh) this September pursuant to the Energy Regulatory Commission’s order that the franchise tax of the National Grid Corporation of the Philippines will be excluded from the transmission company’s pass on transmission cost.

This means that a residential consumer using 100 kWh a month will enjoy a reduced billing of P1.13.

The reduction came about when the ERC recently overturned its previous ruling in 2011 that the country’s distribution utilities and electric cooperatives must include in their monthly electric bill to consumers the payment of NGCP’s franchise equivalent to three percent.

The ERC’s decision came about after the Supreme Court issued a decision this year in a Meralco case that disallowed public utilities from passing on certain taxes as operating expenses to the consuming public.

The three per cent franchise tax is drawn from the total of the following components of the transmission charge namely, power delivery service, system operator, metering, meter service provider and force majeure.

The APEC party list, through Rep. Sergio Dago-oc, had been clamoring for the removal of the tax, saying that the transmission firm must shoulder the said cost as part of its business and must not be passed on to the consumers.

In an interview, Dago-oc said that the removal of the tax will benefit a lot of the country’s residential consumers who continue to pay a lot of items in their bills.

He said the reduction may not that be high but at least it is one less worry for any hard pressed household.

The benefit also goes to big load and industrial consumers since they consume a lot of power, he said. 

Ivory Paatan, Beneco’s rate analyst, said the removal of the franchise tax meant the utility’s low voltage (industrial) customers will enjoy a reduction of P0.144 per kWh or P1.44 for every consumption of 100 kWh while high voltage (commercial) customers will get a reduction of P8.04 per kw or P80.00 for every 10 kw of demand.

The Phil. Rural Electric Cooperatives Association also welcomed the ERC order to scrap the franchise tax.

The association is confident that the accompanying 12 percent value-added tax of the franchise tax will also be removed in the future owing to the SC decision.

The SC declared that “such taxes must be shouldered by the income earner (in this case NGCP) who receives the benefit or protection of the State and that the same cannot be unduly passed on to consumers, by way of tariff, since said tax was paid not for the consumers’ benefit but for the benefit of the business entity earning the income.”

Beneco has 211,000 residential consumers, 15,691 low voltage customers and 90 high voltage customers. – Laarni Ilagan