Benguet Electric Cooperative’s conversion to the Cooperative Development Authority might require a change in the distribution utility’s current rate methodology.
This is brought about by the reality that Beneco must provide the benefits enjoyed by coop members, such as dividends, if its books show a surplus at the end of the year. In coops under the CDA, members are given dividends based on the profits earned by the cooperative.
Beneco officials believe that for the power utility to provide for dividends, there is a need to change the current cash flow methodology to a rate system that could accommodate the provision of such benefit.
Institutional Services Department Manager Delmar Cariño said economic regulation experts have advised Beneco to adopt the return on rate base (RORB) methodology, a system that can accommodate the issuance of dividends to Beneco’s consumer-member-owners (MCOs).
He said as a non-stock, non-profit entity, Beneco at present could not yet provide for the dividend.
“This is why we are asking our consumer-member-owners to be patient because we still have to petition the Energy Regulatory Commission for the approval of our proposed new rate methodology that could satisfy the clamor for the provision of dividends,” Cariño said.
He said Beneco could not, on its own, implement the RORB method.
“It must pass the approval of the ERC.”
But even before the RORB implementation, Beneco is still required to determine the exact value of its assets, liabilities and the depreciation cost of the coop’s assets through another method called the Uniform Rate Filing Requirement.
Cariño said there is a need to determine the exact value of Beneco’s assets to be adopted in the RORB to avoid miscalculations of the new rate system when Beneco is finally allowed by ERC to implement the RORB.
In terms of equity shares, Beneco has also asked the ERC to allow it to treat the capital contributions paid for by the member-consumers under the Reinvestment Fund for Sustainable Capital Expenditures (RFSC) component of their monthly bill.
“We have asked the ERC to allow us to treat the payments made under the RFSC as the member-consumer-owners’ capital contribution so that they will no longer have to pay an amount as their share capital,” Cariño said.
Beneco proposed that the RFSC contributions to be treated as share capital of member-consumers would start from 2004, the year when the unbundling of the monthly bill components was implemented. – Jane B. Cadalig