More than 60,000 member-consumer-owners of the First Catanduanes Electric Cooperative, Inc. (FICELCO) could enjoy a slight reduction in their power bills next year if the cooperative qualifies for exemption from local taxes, fees and charges.
Under a Joint Memorandum Circular signed last Dec. 4, 2024 by the Department of Energy (DOE) Secretary Raphael Lotilla and and the Department of Finance (DOF) Secretary Ralph Recto, the exemption will be granted to all electric cooperatives (ECs) in the country, whether registered with the National Electrification Administration (NEA) or the Cooperative Development Authority (CDA), as long as they comply with NEA’s financial and operational standards,
The Circular provides guidelines for electric cooperatives on the availment of preferential rights under Republic Act (RA) No. 7160, in relation to RA No. 10531. Under this Circular, electric cooperatives are required to secure an annual Certificate of Compliance from the NEA, demonstrating their adherence to the prescribed financial and operational standards.
To qualify for this certification, ECs must achieve at least a 75% rating based on NEA’s compliance parameters. These parameters include maintaining high collection efficiency, achieving a positive net worth, meeting system reliability and system loss standards, conducting annual general membership assemblies and district elections as scheduled, implementing electrification projects to attain 100% customer connection, and submitting complete and timely reportorial requirements to the NEA.
Local taxes is defined as taxes or enforced contributions imposed by an LGU in provinces, cities, municipalities and barangays through an ordinance, such as real property taxes, business tax, franchise tax, and tax on transfer of real property ownership.
All ECs, however, remain subject to regulated and reasonable administrative costs imposed by LGUs. These costs include fees for business permits, mayor’s permits, barangay clearances, community tax certificates, and other charges such as those for water consumption, electricity, and toll fees.
The NEA is expected to issue the guidelines governing its issuance of Certificate of Compliance within 15 days from the effectivity of the Joint Circular or before the end of the year.
“This local tax exemption is a significant milestone for our qualified ECs, as it directly translates to reduced financial burdens that can be reinvested into improving services and achieving 100 percent total electrification,” Secretary Lotilla said. “By reducing these costs, we empower them to focus on expanding access to electricity, especially in unserved and underserved areas, ensuring no Filipino household is left behind,” the Secretary added.
For calendar year 2023, FICELCO has maintained its sterling record with the NEA on its financial, technical and institutional performance for calendar year 2023, earning its “AAA” performance rating and the coveted classification as a “Green” cooperative, meaning they were able to meet all the seven (7) performance standards and parameters.
Under the guidelines, the established key performance standards and parameters are Cash General Fund (at least one month working capital); Collection Efficiency (95% and above); Payment to Generation Companies, NGCP, NEA and Other Financial Institutions (Current/Restructured Current); Result of Financial Operation (Positive); Net Worth (Positive); System Loss (Within the 12% Cap); and System Reliability (30 interruptions/3,375 minutes per consumer per year).
On Cash General Fund for CY 2023, FICELCO had a working capital fund of P109 million, nearly double the working capital of P59 million needed for a cooperative to continue their daily operation for one month.
With an average collection efficiency of 100 percent compared to the standard level of 95%, the island’s cooperative is one of just 27 cooperatives nationwide which are 100% efficient in their collection of accounts receivables.
Its accounts payable with its power supplier, NEA and lending banks were all current, meaning FICELCO is able to pay its power accounts to Sunwest Water & Electricity Co. and its financial obligations to NEA and banks on time.
On the other hand, its net revenue after deducting all costs and expenses was at P43.3 million, while its 2023 net worth was estimated at P335 million, a sharp increase from the 2022 figure pf P254 million.
The co-op management was able to keep System Loss to an historic low of 7.74 percent, compared to the standard level of 12 percent, indicating a highly efficient distribution system.
It has total number of sustained customer power interruptions of 30, which is compliant with standards for an off-grid cooperative and a total duration of outrage of 983.87 minutes, well within the standards.
A check of the unbundled rates being charged by the FICELCO showed that among the rate components in the power rate include Local Francise Tax, Business Tax and Real Property Tax.
The charges for these three components amount to P0.0527 per kilowatt-hour, which could mean a reduction of about P63 per year for a customer with monthly consumption of 100 kWh.