Bukidnon power coops unfazed by coal tax hike

Bukidnon Provincial Capitol, Malaybalay City. (Photo By Kleomarlo – Own work, GFDL)

MANILA — Two power cooperatives in Bukidnon, the First Bukidnon Electric Cooperative (Fibeco) and the Bukidnon Second Electric Cooperative (Buseco), are unfazed by the recent imposition of higher taxes on coal.

The National Electrification Administration (NEA) observed that investing in a sub-transmission consortium works wonders for both Fibeco and Buseco in the Northern Mindanao province.

Fibeco credits its calm demeanor to its procurement of a 69,000-volt (69kV) sub-transmission line, which it shares with Buseco, making them client-owners of the said facility.

Representatives from both Fibeco and Buseco acquired it through a lease-purchase agreement with the National Transmission Corporation (Transco) in 2015, after a long and winding legal dispute that lasted several years over who should get the majority stake.

When the two groups finally agreed to a 50-50 deal, Fibeco and Buseco thought it was best to use the high-voltage power line under a consortium, which then led to the creation of Bukidnon Subtransmission Corporation (BSTC).

The NEA noted that prudence had dictated its acquisition at the time, as both coops feared that if they lose control over the 69kV sub-transmission asset, a bigger company might pursue its own interests in it, affecting the welfare of their member-consumer-owners (MCOs).

“In order to cordon Bukidnon and in order to protect the market, they have to buy the line. That’s practically the concept,” said engineer Artis Nikki Tortola, Deputy Administrator for Technical Services of the NEA and erstwhile chief operating officer of BSTC.

Investing on a sub-transmission facility turned out to be a smart move for both electric cooperatives (ECs), the NEA said, as it helped mitigate the impact of potentially adverse policies they would be forced to adopt under the Electric Power Industry Reform Act (Epira).

BSTC operates the 69kV sub-transmission line that spans over the areas of Tagoloan to Lunocan at 14.4 kilometers (km), Kibawe-Maramag-Aglayan at 79.05 km, and the one-kilometer Maramag-Pulangi lateral line.

Tortola described it as “just like a superhighway where electricity passes through the line” and collects a corresponding toll fee from its clients, Fibeco and Buseco, which are tasked to distribute energy to the end-users.

“In essence, whatever income BSTC derives from its operations eventually redounds to ECs because it could be plowed back either as a form of a reduction of rates or of their capital expenditures,” Tortola explained.

“This way, potential spikes in electricity rates are likewise curbed,” added Regin Mordeno, former Fibeco board president turned chief executive officer of BSTC. “It’s the reason they are not bothered by the coal tax hike today or even the rotating blackouts that befell Mindanao in 2016.”

“If you don’t own it, you are at the mercy of whoever owns the highway. So that is what we have secured and that’s why we were insulated from the crisis that happened in Mindanao. We were the only two coops that did not experience it. We were not affected,” Mordeno said.

Nea said it has long been advocating banking on this kind of asset and other ventures that aim to lower the operational costs of electricity distribution for the benefit of consumers without sacrificing the growth of ECs.

NEA Administrator Edgardo Masongsong is actively encouraging all power cooperatives to put up similar projects to better position themselves in a more liberalized energy market under Epira and with the onset of the Retail Competition and Open Access (RCOA) policy.

“I hope this BSTC is one of the structures that will help us expand the horizons of the electric cooperative movement, creating enterprises that will further the interest of the electric consumers and the electric cooperatives,” Masongsong said in a statement.

Masongsong is known as one of the key figures who pushed for the creation of BSTC during his time as general manager of Buseco and until he was elected as representative of 1-CARE Partylist. He said he did this to protect the ECs in Bukidnon against the possible drawbacks of RCOA.

“Both ECs were actually convinced that they should not exist as mere distribution entity but they should also invest in generation or transmission in order to evolve and compete; otherwise, they will get swallowed up by the industry,” Tortola added.

“Currently, BSTC is still pretty much in its nascent stages with hopes of a promising future,” the NEA noted. “Unlike Fibeco and Buseco, the company is registered with the Securities and Exchange Commission (SEC) as a stock profit corporation, which allows it to easily venture into other businesses.”

“Hopefully, it will not just be the sub-transmission because based on the articles of incorporation, the SEC registration, the corporation is not bound to a single business. Anything is possible. So that actually is an opportunity that BSTC could grab in the future,” Tortola said.

But then, Mordeno said expansion is not an immediate priority for them because they would like to focus first on strengthening BSTC to protect the ECs it serves and their MCOs. He also has his hands full at the moment after reluctantly agreeing to fix the internal problems of Buseco.

“We are meant to protect the member-consumers in a way that they will not get adversely affected by the increases in electricity rates. We aim to reduce that burden on their part. Although (the help) is not direct, through the coops, which are the owners of BSTC, we can do it,” he said.