Beneco MCOs, ex-BODs oppose P684-M payment to power supplier

Pending ERC decision 

 By Daisy A. Lee

BAGUIO CITY -- A group of member-consumer-owners (MCOs) and former board of directors of Benguet Electric Cooperative are opposing payment by Beneco to Team Energy, its main power supplier of P684 alleged back charges pending decision of the Energy Regulatory Commission.  
    The MCOs and former BODs met Sept. 16 here in Hotel Supreme to make a stand on the payment of power rates and Incremental Currency Exchange Rate Adjustment (ECIRA) and Generation Rate Adjustment Mechanism (GRAM).
    The group petitioned the National Electrification Administration (NEA) through Administrator Almeda and Beneco management to stop negotiating with Team Energy and let the case filed before the ERC on rate adjusment, ECIRA and GRAM take its course.
     “MCOs should be vigilant because we are the ones who will be burdened by any rate increase in electricity,” said MCO member Emy Baniwas-Lubos, convenor of the meeting. “It is also our right to be consulted on matter that affect our electric cooperative.”
    In 2004, Beneco entered into contract with Mirant (Phil) Energy Corporation and denominated as Energy Power Purchase Agreement (EPPA).
    The cooperation period is 20 years and the quantity of power involved is 8 mega watts that can be increased by mutual agreement.
    Over a period of time, the energy needs of Beneco increased, so that in 2014 Beneco joined the Region 1 Electric Cooperative Association (RECA-1) aggregation of the purchase of supply of power.
    The purpose of joining the aggregation was to obtain a lower rate because of the bulk supply.
    The increased power supply of Beneco from 2014-2016 was sourced out from the Wholesale Electricity Spot Market (WESM).
    In 2016, Team Energy, the successor of Mirant, learned about the aggregation and they negotiated with BENECO for a new power supply agreement.
    Beneco and Team Energy agreed on a price of P3.85 for the first six months of the year and P3.80 for the last six months.

Beneco withdrew from the aggregation.

In December 2016, a new contract, which will end in March 2024 was signed by Beneco and Team Energy and known as  Letter of Agreement (LOA).

Based on the contract, Beneco will no longer trade with WESM and Team Energy will provide all the power capacity needs of BENECO. 

The LOA also provided an outage allowance of 30 days for Team Energy and a safety net that provides a 66 dollar per metric ton to 123 dollars per metric ton of coal.

From 2016-2020, the LOA has been implemented smoothly but was disrupted in 2021 during the Covid-19 pandemic, the price of coal in the world market increased. Both parties then agreed on a P4.95 generation rate until March 30, 2024 but unfortunately there was no written contract agreement.

In 2022, Team Energy asked for a new rate for they can no longer sustain the increasing price of coal.

Beneco agreed on a 123 dollar per metric ton of coal at P5.73 per kilowatt while Team Energy offered a 90 dollar per metric ton of coal at P6.60 per kilowatt.

To settle this, Team Energy filed a case before the ERC to justify the rate increase but pending the decision they agreed to bill the consumers at P5.73 per kilowatt. Hearings were conducted and the ERC is yet to decide on the case. 

The ECIRA and GRAM, on the other hand, were the burden imposed on MCOs as a result of the stranded debts of the National Power Corporation (NPC). In 2006, the Electric Power Industry Reform Act (EPIRA) was passed, which basically abolished the NPC, MCOs and former BODs said. 

PSALM, which is one of the corporations that took-over NPC, was tasked to liquidate the assets of NPC and to pay its creditors.

When the assets of NPC were sold some debts were not paid, the ECIRA and GRAM were crafted to pay the unliquidated obligations of NPC.

This mechanism added burden to the MCOs without them knowing as it is just added on their electricity bills. The MCOs had been remitting their collections to PSALM from 2006-2012.

Beneco stopped collecting the ECIRA and GRAM in 2012 because they believed this was included in the billing of Team Energy.

A case was filed by BENECO with the ERC for them to decide on whom MCOs will pay the ECIRA and GRAM.

The MCOs cannot be paying double – one for Team Energy and the other for PSALM, said the MCOs and former BODs.

The removal of the 11 BODs and the appointment of five Interim BODs by NEA last Jan. 11 reportedly railroaded the smooth operations on past agreements made.

The Interim Board through Administrator Almeda is now negotiating for power rate adjustments without considering the upcoming decision of the ERC.

The MCOs and former BODs are now petitioning NEA and Beneco management to let the case pending before the ERC to take its course before negotiating for any rate increase and payment of ECIRA and GRAM.