ERC suspends hearing on petition to pass on tax payments

Sorsogon City - Member-consumers of electric cooperatives (ECs) nationwide could heave a sigh of relief, momentarily, after the Energy Regulatory Commission (ERC) suspended the initial hearing on the petition to pass on to consumers the real property tax (RPT) payments of public distribution utilities.

This after advocacy groups launched a rally last March 14 in front of the ERC main office to express their opposition to the petition filed by the Philippine Rural Electric Cooperatives Association (PHILRECA) in behalf of its 121 member-distribution utilities nationwide.

The ERC had scheduled yesterday the jurisdictional hearing for the petition filed last October 2018 as well as the public consultation for Luzon stakeholders. Public consultation for Mindanao was set on March 22 and April 2 for the Visayas stakeholders.

PHILRECA wanted ERC to adopt the rules formulated by the petitioner for the “pass-through of real property tax” as it argued that ECs have no surplus funds to which they could charge the RPT payments. The petitioner stressed that adopting the rules is “valid and timely considering the fact that local government units (LGUs) had assessed and collected RPT payments from ECs”.

It pointed out that the Supreme Court had already ruled that ECs are not exempted from paying RPTs as enunciated in the case of “Manila Electric Company vs. The City Assessor and the City Treasurer of Lucena City”.

The SC ruling stated that transformers, electric posts, transmission lines, insulators and electric meters are not exempted from RPT under the Local Government Code.

However, organizations behind the Malinis at Murang Kuryente (MMK) Campaign rallied in front of the ERC office to urge the Commission to reject the proposal of PHILRECA.

“All property owners pay amilyar (real property taxes) on what they own. Why do we also have to pay for what the coops own?”, MMK Convenor Gerry Arances pointed out.

“Already, electric consumers are bearing the brunt of many ECs’ violation of system loss caps, mismanagement of financial liabilities, and the costly Power Supply Agreements (PSAs) with dirty energy generation companies. Meanwhile, many ECs are guilty of long and frequent interruptions in their respective franchises and failure to electrify areas within them,” Arances stressed.

The group had filed a motion on behalf of its members and consumers nationwide for the ERC to dismiss the petition.

“In previous years, consumers have always been one with ECs to be recognized as tax-exempt just like any other cooperative, since they are supposed to be people’s enterprises owned by the consumers they serve,” said Dr. Clint Pacana, Convenor of the Mindanao Coalition of Power Consumers (MCPC) and president of the Institute for Power Sector Economics (IPSE).

In a press release, Pacana explained that in filing the petition, Philreca abandoned consumer groups who were calling for the exemption of cooperatives from paying for real property tax.

“While the consumers fight it out for their tax exemption, ECs want the easy way of passing on the burden to their supposed owners-- the unfortunate consumers. We hope there is no collusion among local officials, ECs, and other distribution utilities (DUs) for this,” Pacana added.