Philreca seeks ERC OK of pass on charges

MANILA, Philippines — The Philippine Rural Electric Cooperatives Association Inc. (Philreca) is pushing to make the payment of real property tax (RPT) as a pass-through cost for electric cooperatives (ECs).

Philreca, the umbrella group for ECs nationwide, has filed a petition with the Energy Regulatory Commission (ERC) to allow the pass-through cost of RPT.

It asked the ERC to inititate and promulagate rules on its proposal to pass-on the RPT to member consumers of ECs.

This is in light of the Supreme Court decision in the case of Manila Electric Co. (Meralco) versus the city assessor and the city treasurer of Lucena City where it affirmed that transformers, electric posts, transmission lines, insulators and electric meters are not exempted from RPT under the local government units (LGUs).

Philreca acknowledged that the RPT “is the lifeblood of the LGUs” and therefore can no longer be avoided by ECs.

“The ECs have no option but to pay the RPT otherwise the LGU can exercise its right to levy the real properties of the ECs to enforce collection thereof and thereby hamper the ECs from performing its mandate of providing electric service to its member-consumers,” it said.

However, ECs do have the flexibility to shoulder the payment of RPTs given the current tariff for power coops.

Philreca argued that ECs do not provide surplus funds “by way of a return on rate base and depreciation” like what distribution utilities (DUs) have.

However, power rates of ECs do not allow it to have surplus funds “by way of a return on rate base and depreciation” like what DUs have.

“Thus, while the private DUs can exercise certain degree of flexibility by charging the RPT against their surplus funds, the ECs are constrained to fund the same from their meager internally generated funds and in most cases from loans obtained from the National Electrification Administration and other financial institutions,” Philreca said.