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BENECO’s fate up to consumers

BAGUIO CITY (Feb. 15) — Member-consumers should decide in a general assembly whether to convert Benguet Electric Cooperative (BENECO) into a cooperative or not.

BENECO General Manager Gerardo Verzosa disclosed this on the conversion of the BENECO into a stock cooperative and its registration with the Cooperative Development Authority (CDA). He added that the issue on conversion must be brought to the attention of 103,000 electric consumers in Baguio City and the province of Benguet.

BENECO is presently a non-stock, non-profit cooperative but being an electric facility, it has not registered with the CDA and has not fulfilled the requirements of a full-fledged cooperative. It has been criticized for not issuing certificates of capital shares, the patronage refunds and dividends that a cooperative is bound by law to issue.

BENECO, may be registered with the CDA once it has completed the requirements for a cooperative, he said. It also has to issue the required certificates of ownership to each of its member-consumers to establish the facility’s ownership.

The processes for the issuance of a certificate of ownership remain a question though Verzosa said BENECO could do it just to be able to register with the CDA. It has until April 2 to register as a stock cooperative with the CDA.

Verzosa elaborated that the conversion of the electric distribution and retail facility into either a private corporation, or a stock cooperative or it can remain under the supervision of the National Electrification Administration (NEA) is mandated by the Electric Power Industry Reform Act (EPIRA).

Impossible task

However, BENECO seems not ready to hold the general assembly. Verzosa said it is almost impossible to gather around 53,000 people, or 51% of the member-consumers, in one venue. A referendum where polling places will be set up in several areas is most probable, he said.

Capitalization is no longer a question, Verzosa emphasized, because whether they like it or not, the BENECO member-consumers have been paying their capital share through the payment of the electric bills. “It was the money from the consumers which BENECO used to pay its debts and it continues to collect capital shares because it is included in the rate,” Verzosa disclosed.

“If the purpose of the general assembly is to raise capital for the stock cooperative, then BENECO has complied with that requirement,” Verzosa said.

The former bundled rates carried items for debt servicing and reinvestments while the new unbundled rates include items on reinvestment. According to Verzosa, even now that BENECO has paid all its debts to NEA, it still continues to collect for reinvestment because the EPIRA says so.

“So this forms part of an investment from member-consumers, which BENECO uses to expand its services to the rural areas,” he clarifies. Capital contribution from member-consumers continues to pour with the monthly collection.

Stock cooperative?

Meanwhile, two experts on cooperatives said that there is no such thing as a stock cooperative, even under the CDA Code.

“A cooperative should always be a non-stock, non-profit organization,” Atty. Renato Fernandez, present chairperson of the Board of the Baguio-Benguet Community Credit Cooperative said. He said that as a corporation, BENECO is compelled to enter into a competitive venture where profit is the ulterior motive. As a cooperative, it will be compelled to render services to its members. Only savings for those who contributed may be redistributed as patronage refunds, he clarified.

Prof. Federico Balanag, chair of the Benguet Association of Retired Persons (BARP) said it would be good for BENECO to remain a non-stock, non-profit cooperative. He said, a greater number of people using electricity comes from the ranks of the “hand-to-mouth existence”.

Both Balanag and Fernandez fear that if BENECO registers with the Securities and Exchange Commission (SEC) as a stock corporation, it will be in danger of being subsumed by the bigger electric corporations. Multi-millionaires will buy out BENECO, they said.

Verzosa however, seemed not ready to give out dividends to its members saying it has been giving them cheaper electric power at P4.50 per kilowatt-hour as compared to MERALCO and other electric facilities which charge as much as P5.75 per kilowatt-hour.

Fernandez, on the other hand, said it is enough for BENECO to give patronage refunds for member-consumers as their share in the operation’s savings. How to compute the patronage refund for each member-consumer is a task that management can easily dispose of, he said.

Chie Galvez, spokesperson of the Metro-Baguio PRO-CONSUMERS said that whatever direction BENECO will heed, there is always a danger that it will be affected by the implementation of EPIRA. She said that right now, the electric power facility has been dealing with a private power producer, Mirant where 90% of its power will come from and 10% from the wholesale electricity stock market.

BENECO’s contract with National Power Corporation (NPC) will lapse in July. Mirant offered to sell power at P4.92 per kilowatt-hour or P0.08 lower than the NPC offer.

“Market forces will dictate the prices, that even if BENECO will remain a non-stock, non-profit entity, the challenged it management will have to confront is how to maintain its service-oriented stature at the same time considering the interests of its member-consumers,” Galvez said.

Full implementation of EPIRA is expected in the next few months. # Lyn V. Ramo for NORDIS

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