ERC to hear co-op plea to pass on realty tax

July 8, 2019 | 12:32 am

https://www.bworldonline.com/erc-to-hear-co-op-plea-to-pass-on-realty-tax/

THE ENERGY REGULATORY COMMISSION (ERC) will hear this week a petition filed by electricity cooperatives to treat rural property tax (RPT) as a pass-on cost that can be collected from power users.

In its order, the regulator had given interested parties until July 4 to submit comments on the petition of Philippine Rural Electric Cooperatives Association, Inc. (Philreca). The first public consultation is scheduled on July 10.

“Parties who have filed their written comments on or before the prescribed period would be given priority during the above-scheduled public consultation,” the ERC said in its petition.

In its petition, Philreca asked the ERC to authorize its members to pass on the tax cost to their customers, saying this move would be “valid and timely considering that local government units (LGUs) had assessed and collected RPT” from electric cooperatives (ECs).

“The RPT should therefore be allowed to be a pass-through charge to the ECs member-customers subject to post verification and confirmation by the Commission similar to the local business and franchise tax,” Philreca said.

The public consultation comes as the association recently emerged as one of the winning party-list groups during the May 13 elections, allowing it to sit as a representative in Congress to represent electricity cooperatives and their member-consumers.

Janeene D. Colingan, executive director and general manager of Philreca, did not immediately respond when asked to comment on Wednesday’s public consultation.

Neither did ERC Spokesperson Floresinda B. Digal immediately respond when asked about how soon the regulator can rule on the matter as well as comments received as of the deadline.

This week’s hearing is just the Luzon leg of the public consultation for stakeholders. The ERC directed Philreca to inform its members and the stakeholders of the event “by any means available and appropriate.”

The order was signed by Josefina Patricia A. Magpale-Asirit, ERC oversight commissioner for legal service.

The ERC previously set the hearing and public consultation on the petition between March and April in venues in Luzon, the Visayas and Mindanao.

In its petition, the association said the need for ERC rule-making became more urgent after the decision of the Supreme Court in the case of Manila Electric Co. versus Lucena City’s assessor and treasurer that affirmed that transformers, electric posts, transmission lines, insulators and electric meters are not exempted from RPT.

“The RPT is the life blood of the LGUs authorized by the Local Government Code of 1991 (Republic Act No. 7160) and thus the collection and payment thereof can no longer be avoided by ECs,” Philreca said.

“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-customers.”

The association also said its members’ existing tariffs do not provide for surplus funds through a return on rate base and depreciation like those of private distribution utilities.

It said while private utilities can exercise a 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.

It added that in most cases, the funding comes from loans obtained from the National Electrification Administration and financial institutions.

Philreca also asked for other relief “deemed just and equitable.” — Victor V. Saulon