THE Benguet Electric Cooperative (BENECO) is hiking consumer electricity rates after generation costs have increased.
In August, the more than 140,000 residential consumers under BENECO’s jurisdiction who consume more than 46 kilowatt-hours (kWh) a month will have to pay P9.4007 per kWh.
The rates in June and July were P8.4918 and P8.5989 per kWh, respectively. The bills for BENECO consumers increased by an average of P0.2232 per kWh per month since February of this year.
The price hike is said to be caused by an increase in the cost paid to Team Energy, the power generation company that runs the coal fired power plant in Sual, Pangasinan where Beneco’s power supply comes from.
The price of electricity in the past year was lower due to global coal costs dropping due to the COVID-19 pandemic. According to BENECO General Manager Melchor Licoben, the gradual revival of businesses and industries as the world reopened economies also increased demand, and subsequently prices, of coal globally. The increased demand for power pushed coal prices high this year, thus breaching the coal bandwidth between Beneco and Team.
The Beneco and Team contract provides that the generation cost from Jan. to June will be P3.85 per kwh and from July to Dec., P3.80 per kwh.
“The generation cost will then be rebased, meaning the formula for its computation will be adjusted to absorb the index prices,” Licoben said, adding that the generation cost eats up more than 50% of the power bill.
BENECO consumers will also have to pay P0.0696 per kWh for incremental currency exchange rate adjustment (Icera) and P0.1948 for generation rate adjustment mechanism (GRAM), both inclusive of value-added tax.
At the same time, P0.1138 per kWh of the cost increase in August is due to an increase in cost of ancillary services charges, remitted to the National Grid Corporation of the Philippines.
“But the distribution, supply and metering charges have remained. These are the charges that Beneco collects for its operational expenses,” Rowina Damian, BENECO’s rate officer said.
The changes in generation cost remains to be the driver for the increase or decrease of electricity bills issued monthly to member consumers.
Licoben said the uptick in the generation charge on a monthly basis is legally allowed even without approval by the Energy Regulatory Commission (ERC) compared to the other components of the electric bill.
Licoben said the generation sector is by law recognized as a deregulated sector of the power industry pursuant to the Electric Power Industry Reform Act (EPIRA). “This means that there is no need for ERC approval of the generation cost since it is governed by the contract between the power supplier and the distribution utility,” he said.
The contract includes terms and variations based on foreign exchange rate and fuel costs whose price changes are indexed in a pre-agreed formula, Licoben said.
Beneco, just like other ECs, will have to pass such cost and its adjustments to the consumers as the cost is deemed a “pass through” charge, or one that Beneco as a distribution utility, will have to collect as a collecting agent for the power supplier.
The RFSC and DSM are Beneco’s “pass on” charges to the consumers or the charges that it collects and retains for its operations and capital outlays.
Licoben said that compared to the generation charge, the RFSC and DMS charges cannot be changed at the will of the electric cooperative since the distribution sector is a regulated sector of the power industry where any change to such bill components must be approved by the ERC.
“The volatility of global coal prices will definitely affect the generation charge of distribution utilities. Our power supply agreement with Team was very attractive as it gave Beneco the lowest power cost for the last three years,” Licoben said. – with a report from Delmar Carino