Issue of January 15, 2012

102nd Baguio Day Anniversary Issue
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Baelco firm on managing city’s EC, but legal existence vague
by Liza Agoot

The proposed separation of Baguio from the franchise of the Benguet Electric Cooperative has created issues that the public must be enlightened on to help them decide rationally.

Rep. Bernardo Vergara in House Bill 5518 said that in the event a separate franchise is issued for Baguio, it shall be subject to the conditions established by the Constitution and existing laws.

The Energy Regulatory Board, Cooperative Development Authority, National Electrification Authority, and all government agencies shall prepare and implement an operational plan for the transfer of operation of the present electric system to the Baguio Electric Cooperative. The funds needed to implement the intents and purposes of the Act shall be chargeable to the funds authorized for  ERB, CDA, and NEA, and such amount necessary for its operation and maintenance shall be included in the Annual General Appropriations Act.

Based on proposal’s explanatory note, the organization of the Baelco formalizes the first step for the city to have its own power cooperative which will provide the best service at the lowest cost possible.

It cited that the Electric Power Industry Reform Act (EPIRA) established a structure and regulatory framework for the electric power industry which would propel the engine of growth in developed and developing areas like Baguio.

The EPIRA’s thrust, it added, is to tap private entities like Baelco for the expansion and improvement of the industry as the present firm’s (Benguet Electric Cooperative) large improvement, private debts, and their highly capital-intensive character have long been acknowledged as the critical constraint to better service. It also said that the present jaded structure of the industry in Baguio must be stopped with the generation and transmission sectors centralized and monopolized, while the distribution is fragmented, making the operations seem uneconomic.

It also said that the flaws caused a low usage of existing generation capacity, extremely high and uncompetitive power rates, poor quality of service, dismal to forgettable performance of the government power sector, power theft, high systems losses, and inability to develop a clear strategy for overcoming these shortcomings.

The concern of the public, the bill stated, is affordable power rates. The rates should strike a balance between the clashing interest of the utility and the consumers. Baelco must strike the balance, thus a franchise must be granted to it to ensure consumer protection and enhance competitive operation of the electricity market.

A copy of the proposal to be authored by Sen. Lito Lapid was furnished by CDA Officer Martin Manodon to the Courier has the same information contained in HB 5518.

Baelco, according to its founding chair Tol Opiniano, was registered in 2007 as a cooperative. It does not have a large membership but many have verbally signified their support to the group’s cause. He said other supporters do not yet want to be placed in writing. Professor Federico Balanag is the group’s chair.

CDA data showed that Baelco failed to comply with provisions of the Cooperative Code, since after it registered in 2007, it did not comply with the reportorial and documentary requirements which should be submitted annually.

When the new Cooperative Code was passed in 2008 and became effective in Feb. 17, 2009, it mandated all cooperatives to re-register.

Failure to re-register by submitting a copy of the certificate of registration or certificate of confirmation, articles of cooperation, by-laws and their latest audited financial statement within one year from the effectivity of the Code renders a coop’s registration cancelled, at the instance of the court or with the discretion of the court. In this case, of the CDA.

Manodon said that Baelco did not re-register even after the deadline which was first set in March 2010 and extended to September of the same year.

Based on the Cooperative Code, Baelco then is deemed dissolved and therefore, inexistent.

Article 68 of the new Cooperative Code on dissolution by failure to organize and operatestates that if a cooperative has not commenced its operation within two years after the issuance of its certificate of registration or has not carried on its business for two consecutive years, CDA shall notify the cooperative to show cause as to its failure to operate.

Failure of the cooperative to promptly provide justifiable cause for its failure to operate shall warrant the CDA to delete its name from the roster of registered cooperatives and shall be deemed dissolved.

Asked for a copy of the registration of Baelco submitted in 2007, Manodon said that they do not have a copy because Baelco took their copy.

He however said that based on the registration (no copy is available with the CDA), Baelco’s primary objective is to give service connection to the electric consumers in the city of Baguio and to undertake electric distribution when the environment permits or when the franchise is granted to them.

Asked who will be managing Baelco, Balanag said his son Ferdinand, an independent film director, and the children of Baelco members are being trained to manage the cooperative.

Baelco members said that once a franchise is granted, they will open the positions to the public.

They said that once the firm operates, its first agenda would be to register as a stock cooperative.

Article 4, Section 3 of the Coop Code on member economic participation states that members contribute equitably and democratically control the capital of their cooperative. At least part of that capital is the common property of the cooperative.

They shall receive limited compensation or limited interest, if any, on capital subscribed and paid as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative by setting up reserves, part of which should at least be indivisible; benefitting members in proportion to their patronage of the cooperative’s business; and supporting other activities approved by the membership.

Article 76 of the same law on shares states that the term “share” refers to a unit of capital in a primary cooperative, the par value of which may be fixed to any figure not more than P1,000. The share of capital of a cooperative is the money paid or required for the operations of the cooperative. The method for the issuance of share certificates shall be prescribed in its bylaws.

In the present set up of Beneco, no share or dividends are distributed, it being a non-profit cooperative. In cases of excess in the funds, these are used for the improvement of the facilities and services of the cooperative. Compared to the previous years, when it takes days or months for power to be restored during typhoons, restoration now would only take hours, courtesy of the maintenance and improvements undertaken.

Based on the ERC comparative data, Beneco has the lowest rates among the coops in the region. Its rates are also lower compared to that of coops in Pangasinan and Nueva Ecija.

Based on the 2009, 2010 and July 2011 data, Beneco’s rates were pegged at P5.30, P6.49 and P7.23 per kilowatt hour, respectively, compared to Ifugao’s P10.47 (2009) and P10.22 (July 2011)/kwh rates.

Kalinga-Apayao, Mountain Province, and Pangasinan coops charge an average of P2 to P3 higher than Beneco rates.

Kalinga-Apayao for instance charged P8.93, P10.03 and P10.33/kwh, respectively for the years 2009, 2010, and 2011.

Mountain Province charged P8.37, P9.08 and P10.81/kwh.

Pangasinan on the other hand charged P7.71, P8.14, and P10.39/kwh.

San Jose City, which charges lower than the aforementioned cooperatives collects P7.31, P7.34, and P8.75/kwh, which is still slightly higher than that of Beneco’s.

In a sample Beneco billing statement covering the period October to November 2011, a consumer using 18 kwh paid P83.71. Comparatively, client of a CDA-registered electric cooperative who consumed the same amount of electricity paid P110.92.

Beneco, which was created under the Rural Electrification Law, was given the mandate, as well as the franchise to operate in Baguio and Benguet. It continues to use the word ‘cooperative.’

Article 130 of the new Cooperative Code, which dwells on  the registration options of electric cooperatives, states that NEA-registered electric coops, which opt not to register with the agency are allowed to retain the word ‘cooperative’ in their names.

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Baguio Central University
Baguio Country Club
Benguet Electric Cooperative Inc.
Congressman Mark Go
Data Center of the Philippines of Baguio City, Inc.
Department of Health – CAR
Kings’ College of the Philippines
Mayor Benjamin B. Magalong
Pines City Colleges
Sangguniang Panlungsod
SM City Baguio
Social Security System
Veterans Bank

Albergo Hotel and Residences
Baguio Center Mall
Baguio Water District
C & Triple A Supermart
Congressman Nestor B. Fongwan
Curamed Pharmacy
Department of Agriculture – CAR
Department of Environment and Natural Resources – CAR
Ganza & Solibao Restaurants
GMS Technology
Governor Melchor D. Diclas
John Hay Management Corporation
Mayor Romeo K. Salda
MMS Development Training Center Corporatino
Mother Earth Deli Basket
Philipppine Science High School
Regional Development Council – CAR

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