Member-consumers of Benguet Electric Cooperative should brace themselves for an increase in their electric bills next month.
The Beneco board of directors and management announced the rate adjustments last week and explained the same during the annual general membership assembly (AGMA) in Kapangan, Bokod, and Baguio City held on June 3, 10, and 17.
Beneco Assistant General Manager Melchor Licoben said a total increase of around P1.50 per kilowatt hour may be expected in the next billing cycle on top of the previous adjustments in the generation cost implemented by Beneco’s power supplier due to the increased price of coal in the world market.
He explained the first adjustment amounting to around 30 to 32 centavos is for the incremental currency exchange rate adjustment (Icera) and generation rate adjustment mechanism (Gram).
Icera and Gram are collected by distribution utilities like Beneco from member-consumers and paid to the Power Sector Assets and Liabilities Management Corp. (Psalm), pursuant to a March 2012 order of the Energy Regulatory Commission that was only finally approved for implementation in 2018.
Beneco had been paying the Icera and Gram to its power supplier, Team Energy, as part of its rate contract from 2012 to 2014, which Beneco believes the latter should have but did not remit to Psalm.
Beneco has decided to stop paying the amounts to Psalm since it should only be collected over a definite period as per the ERC decision but paid the same to Team Energy, resulting in overpayment.
Beneco did not collect the same, amounting to more than P221 million, from the member-consumers from January 2018 to August 2022, and only collected from September 2021 to February 2023.
This means Beneco must pay Psalm the P221M, and this amount will be collected from member-consumers pending the decision of the ERC on the petition Beneco filed over the overpayment.
Licoben said the BOD and management, upon review of the contract and the ERC petition, agreed they have to settle Beneco’s obligations to Psalm and to stop the continued increase in penalties and surcharges.
“So we are expecting a rate adjustment of 30 to 32 centavos depending on the final amount. We are sure this will not be welcomed by our member-consumers because definitely when we effect the rate adjustment you will see an increase in the rate, but we are considering some remedies other than the long-term power supply contracting,” Licoben said.
Another increase of around P1.20 is expected next month, which again involved Beneco’s contract with Team Energy.
Licoben said Team Energy believed Beneco owed them P2.3 billion since it wanted to charge a higher rate because it could no longer afford the interim rate of generation cost it gave Beneco in their contract due to the spike in the cost of running its power plants over the last three years.
He explained initially they were able to negotiate a rate from 3.85 to P4.95/kwh instead of P7 to be billed by Team Energy, saving member-consumers an avoided cost of P200M for five months.
The rate was again adjusted from P4.95 to P5.73, which is the amount Beneco has been charging to the consumers, yet Team Energy was billing Beneco a higher amount.
Licoben said the parties went to ERC which has yet to decide on the final rate that must be charged to Beneco, adding that negotiations with Team Energy continued, leading them to initially agree to reduce the P2.3B to more or less P680M.
“This is good news. Had we not insisted in the past negotiations with Team Energy, we could have collected that P2.3B from the MCOs (member-consumer-owners), but because we insisted that should be the amount of the bill, they finally agreed. But after we sign the agreement, the bad news is this will be passed on to the MCOs, but we would like to assure you that the rate we will get is actually still lower than most generation costs charged by other DUs, which are almost double than the previous amounts,” Licoben said.
He said other remedies being explored to keep power rates low includes Beneco going back to the wholesale electricity spot market to register as a direct member, but would expose it to the rates that are available in the market which are unstable.
Apart from power supply contracting, Licoben said Beneco’s goal is to develop its own energy resources, which it already started in Man-asok, given the potentials in the area for hydropower generation.
“By doing so, by owning power plants and producing our own, we don’t need to earn profit. What we only need to cover are the capital expenditures and operating expenses. Sixty percent of our electric bill comprises of the generation cost which we can save on if we have our own power source. So this is what we see as a way to reduce power cost,” he said. – Hanna C. Lacsamana