BY BELINDA SALES
IN THE contentious issue of power rates, every hardworking power consumer expects, even demands, transparency in the computation of his or her power rates, and, equally important, every Boholano needs to understand the basics that comprise our monthly power rates — yes, monthly, because our electricity rates, as you have observed over the years, vary.
Changes in electricity rates
Why do power rates change every month? Power rates fluctuate every month for a variety of reasons. However, the primary factor is the change in Generation Costs that Bohol I Electric Cooperative, Inc. (BOHECO I) pays its power suppliers, also called independent power producers (IPPs), namely, 1) Energy Development Corporation (EDC), a geothermal power plant located in Leyte (with contract ending on December 25, 2033); 2) Cebu Energy Development Corporation (CEDC), a coal-fired power plant situated in Toledo City, Cebu (with contract ending by 1st quarter of 2026); and the 3) Wholesale Electricity Spot Market (WESM), operated and managed by Independent Electricity Market Operator of the Philippines. EDC and CEDC have Power Supply Agreements (PSAs) or contracts with BOHECO I duly approved by the Energy Regulatory Commission (ERC).
What is a PSA? A PSA is a contract – a legal instrument binding BOHECO I with its power suppliers EDC and CEDC. The CEDC PSA was obtained through direct negotiations between BOHECO I and CEDC in 2010 when the requirement for a Competitive Selection Process (CSP) was not in place yet. In contrast, the PSA or contract with EDC was the outcome of a CSP participated by several IPPs or power suppliers.
Moreover, other factors influencing the changes in power rates include demand for electricity, availability of supply, and fuel prices (like coal and other fuels). These conditions are provided in the PSA.
September 2024 Power Rate for Residential Consumers
This month’s effective rate for residential consumers is P11.6692 per kilowatt-hour (kWh). This is higher compared to last month’s P11.4377/kWh, generating an increase of P0.2315/kWh.
For a better appreciation of your power bill, let’s break down the bill for September 2024 to show power consumers of BOHECO I where the payments go and why each component is important:
I. Generation Cost: P6.7678/kWh (58.00%)
This is collected by BOHECO I and paid to EDC, CEDC, WESM, and the Approved Net-Metering Accounts. This is comparatively lower than last month’s P7.0668/kWh, reflecting a decrease of P0.2990/kWh essentially due to lesser usage of power supply coming from WESM and lower generation rates charged by EDC and CEDC.
Let’s pause to understand WESM. WESM is like a marketplace where power supply is available at any given time from various sources or IPPs including geothermal power plants, coal-fired power plants, diesel power plants, hydropower plants, and even solar energy, and ready-for-purchase by any distribution utility (DU) or electric cooperative (EC) served by the interconnected Luzon, Visayas, and Mindanao transmission grids.
To avoid the impact of WESM price unpredictability, it is recommended that only a fraction of a DU’s/EC’s power supply shall be sourced through WESM, which is approximately 10% of the DU’s/EC’s power requirements. The rationale behind this policy is that electricity is a real-time commodity and any shortage in the contracted power supply with CEDC and EDC, will be bought from WESM. Inversely, should BOHECO I’s combined contracted power supply from CEDC and EDC be more than the actual power requirements of BOHECO I, WESM will also buy the same power.
What is an Approved Net-Metering Account? Net-metered accounts are those availing of the Net-Metering program. If you have solar panels on your rooftop, and your net-metering application is approved, any excess power generated by your Solar Photovoltaic System delivered to BOHECO I’s distribution system will be purchased by the electric cooperative based on the average generation rate of the prior month.
II. Transmission Cost: P1.1640/kWh (9.97%)
This is collected by BOHECO I and remitted to NGCP – the country’s transmission network, to transport electricity originating from the power plants to BOHECO I’s substations. This charge is significantly higher than last month’s P0.6615/kWh, with an increase of P0.5025/kWh owing to NGCP’s ancillary services.
III. System Loss: P0.5124/kWh (4.39%)
BOHECO I collects this to pay power suppliers for the unavoidable energy losses that occur during the actual delivery (transmission and distribution) of electricity from the power plants passing through the transmission network and coursing through the electric cooperative’s substations and distribution lines to your homes or commercial establishments. This rate also varies.
What are the factors contributing to system loss? A wire’s inherent characteristic is to resist the flow of electricity. This characteristic is the main cause of system loss. A distribution system like BOHECO I comprises wires and cables. Moreover, electrical equipment also consists of wires. When transmitting electricity through lines and equipment from the source up to its destination, a wire’s natural property prohibits it from delivering the power supply at 100%. The losses that happen along the way are the system loss.
System loss has its technical and non-technical features. Technical loss is attributed to the natural properties of wire and equipment, however, with sound engineering practices and design, technical losses can be lowered to an optimal level like what BOHECO I accomplishes. Over the past 20 years, the system loss of BOHECO I had always been at a single digit, way beyond the allowed system loss cap of 10.25%. The actual system loss of BOHECO I is at approximately 6%. Meanwhile, non-technical features include electricity theft, improperly-working electric revenue meters, and vegetation crowding the lines.
For the September 2024 billing period, the system loss charge of BOHECO I is only pegged at P0.5124/kWh. Again, this will vary every month based on a 12-month rolling average system loss. But the good news is that a decreased system loss benefits power consumers. It means they pay less charges.
IV. Distribution, Supply, and Metering (DSM) Charges: P1.6109/kWh (13.80%)
This helps BOHECO I operate and ensure that it can deliver reliable electricity to your homes, businesses, and other essential services. This charge has been constant since 2007 after it was approved by the ERC. BOHECO I cannot adjust this without ERC approval.
V. Reinvestment Fund for Sustainable CAPEX (RFSC): P0.5232/kWh (4.48%)
Collected by BOHECO I to fund essential projects to upgrade and maintain its facilities such as substations, distribution lines, and other critical infrastructure to ensure a reliable and stable power supply, and to support the long-term efficiency and resilience of BOHECO I’s electrical system.
VI. Taxes: P 0.7799/kWh (6.68%)
This includes Value Added Tax or VAT that is remitted to the government.
VII. Regulated Charges and Subsidies: P0.3110/kWh (2.67%)
These are payments to government entities like the Power Sector Assets and Liabilities Management or PSALM, National Power Corporation’s Missionary Electrification Program, and the National Transmission Corporation or TRANSCO, along with subsidies for Lifeline Consumers and Senior Citizens.
We should always consider the Missionary Electrification Program as our contribution to our fellow Filipinos and Boholanos residing in far-flung areas like small islands – which are plenty in Bohol, mountainous barangays, areas reachable only by a single motorcycle, or trekking, and barangays that are too far to be connected to a substation or served by a distribution system, so they, too, can enjoy electricity.
On the other hand, Lifeline consumers are marginalized customers consuming not more than 17kWh and are entitled to the following discounts: a) 0-16kWh – 10%; and b) 17kWh – 5%. The discounts given are subsidized by all non-Lifeline consumers in BOHECO I’s franchise area. Senior Citizens who apply for a discount also enjoy a 5% discount as provided in the IRR of Republic Act No. 9994 – The Expanded Senior Citizens Act.
For a dose of good news, “BOHECO I is among the very few electric cooperatives in the country that has energized all of its franchise area’s municipalities, barangays, and sitios,” says Engr. Algerico L. Siga, PEE, BOHECO I’s Chief of Corporate Planning and IT.
It is important to note that BOHECO I does not control the power rates. BOHECO I also functions as collection channel receiving pass-through charges for other power industry partners.
Finally, for the September 2024 billing period, BOHECO I, among the 38 DUs/ECs operating in the Visayas region, was one of the “Top 3” electric cooperatives/distribution utilities with the lowest average effective rates. In the province of Bohol, using the September 2024 billing period as a reference, BOHECO I had the lowest effective rate, notwithstanding that it serves 26 municipalities and approximately half of the entire province’s power requirements.
BOHECO I’s P11.6692/kWh effective rate for residential consumers in September 2024 is a commitment that the electric cooperative is willing to sustain given all the favorable elements.
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The writer hosts Woman Talk with Belinda Sales every Saturday, 10 a.m. at 91.1 Balita FM Tagbilaran City. Email at belindabelsales@gmail.com. X @ShilohRuthie./PN
