BAGUIO CITY (Aug. 26) — The Benguet Electric Cooperative (Beneco) last Tuesday asked the Energy Regulatory Commission (ERC) to withdraw its order for Beneco to refund its consumers a total of P33.9 million, saying there was no over-collection for the purchased power adjustment (PPA) component of its billings from January 1999 to April 2004.

In Beneco’s motion for reconsideration, they argued that they followed the 12-month running average systems loss adopted by the then Energy Regulatory Board (ERB) in computing the PPA for the five-year period covered by the refund order.

Beneco said the ERC only issued on January 14, 2005 its policy for electric cooperatives and other energy distributors to shift from the 12-month average to actual monthly systems loss in determining the PPA.

Previously, the Beneco noted that the ERB used the 12-month average systems loss in reviewing its 1996-1998 billings and found an under-billing of P2.9 million, but the cooperative board waived from collecting.

The ERC took over the functions of the ERB in 2001 after the passage of the Electric Power Industry Reform Act.
“We are surprised by the retroactive application of the monthly systems loss average and its adoption without public hearing or consultation with the electric cooperatives which, for lack of any ERC notice, had been using the ERB formula,” said Beneco legal counsel Emilio Edgar Doloroso Jr.

The ERC ruling is expected to affect other cooperatives which, like the Beneco, were guided by the ERB formula, he added.

Aside from seeking suspension of the implementation of the refund order, Beneco also asked the ERC to suspend the revised PPA confirmation process and to provide copies of documents supporting the order.

The Beneco said ERC did not explain its computation as basis for its order. While ERC used the monthly systems loss in its review, it adopted the 12-month average systems loss for the Automatic Generation Rate Adjustment Mechanism (AGRAM), from November 2005 to the present, the Beneco also noted.

Unless the ERC reconsiders its order, the refund would only cover consumers during the four-year period reviewed. An individual consumer would be refunded 3.72 centavos per kilowatt hour, or P3.72 per month based on a 100 kwh consumption, to be reflected in future billing cycles.

Beneco corporate services manager Brenda Carling pointed out that the fluctuating systems loss of distribution systems has a severe negative effect in the PPA rate charged to consumers. If the systems loss is above the cap of 14%, Beneco cannot recover the additional loss. If the loss is below the cap, it can only recover the actual systems loss.

“The use of the 12-month average systems loss will level off the impact of the erratic monthly fluctuations of our systems loss. To reflect the true cost of service, the ERC should use the actual systems loss without taking into account the systems loss cap,” she said.

While the commission claims that its PPA formula is revenue neutral, it does not address the recovery of the cost of investment of the electric cooperative has poured into the system to improve its operations, Carling stressed.

“The benefit of the systems improvement is automatically passed on to the consumers in terms of cheaper rates. However, the PPA issue has nothing to do with the upcoming referendum to determine whether Beneco should register as a stock cooperative with the CDA,” she clarified.

“The rates of any distribution utility, be it a non-stock or stock cooperative, or even a stock corporation, are regulated by the ERC which also reviews their application of the PPA formula,” she said. # Ed Brillantes