Manila: The Benguet Electric Cooperative (Beneco) expressed support to President Ferdinand R. Marcos Jr.'s proposal to remove systems loss charges from consumers' electricity bills but said a thorough study is needed to ensure the measure will not adversely affect electric cooperatives. "Malaking usapin 'yan. Tayo ay nakikiisa sa Pangulo sa SONA niya kahapon, especially sa systems loss at VAT (That is a complicated issue. We support the President's proposal in his State of the Nation Address, especially on systems loss and VAT)," Beneco General Manager Melchor Licoben said in an interview Tuesday.
According to Philippines News Agency, Licoben said any proposal to abolish systems loss charges should first distinguish between electric cooperatives and investor-owned distribution utilities. He highlighted that electric cooperatives operate on a nonprofit basis and collect only the amount approved to cover their operating and maintenance costs, unlike private distribution utilities, which are allowed a profit margin.
Licoben cautioned that if systems loss charges are removed without considering operational needs, it could affect the operational costs and potentially lead to financial instability or bankruptcy of cooperatives. He also pointed out that systems loss charges include the value-added tax (VAT), and noted that similar proposals to remove VAT on systems loss have been filed in Congress but have stalled due to their impact on government revenues and policy considerations.
He emphasized that some level of systems loss is unavoidable in power distribution, citing international rates of around 3 to 6 percent. Beneco's allowable systems loss is 10.25 percent, but they currently operate at 8.4 percent. Reducing systems loss requires investment in projects, which are part of operational costs.
Licoben suggested that reducing generation charges, which make up a significant portion of Beneco's electricity rate, would more effectively lower consumers' power bills. He also proposed government investment in power generation to help subsidize systems loss, instead of passing the cost to consumers.
Beneco, known as one of the country's largest and financially stable electric cooperatives with a Triple A rating, is open to participating in discussions on the President's proposal. Licoben emphasized the cooperative's willingness to help craft a measure that benefits both distribution utilities and consumers.
