Wednesday, November 07, 2007 Power rate hike looms in M. Occidental By Ryan Rosauro Correspondent
OZAMIZ CITY -- Consumer rights advocates in Misamis Occidental are worried of a looming increase in retail power rates in the province due to franchise and realty taxes levied by the City Government here on the local power distribution utility.
Virgilio Sandoval of the Kalihukan sa Mabinantayong Konsumante (KMK) said that if the franchise and realty tax assessments of the City Government becomes final, consumers will stand to absorb the tax burden through a hike in the cost of electricity.
Several days ago, city treasurer Alma Toledo has revealed that her office had completed its computation of the tax obligations of the Misamis Occidental II Electric Cooperative Inc. (MOELCI II) using the new guidelines set forth by the Department of Finance.
As computed by the City Treasurer's Office, the franchise and realty tax assessed on MOELCI II covered the period 1996 to 2006, hence the total tax obligation includes penalties.
In all, according to Toledo, the City Government is entitled to collect from MOELCI II some P11.6 million, P4.8 million as levy on real property and P6.8 million on franchise.
Sandoval said the tax levies could have been avoided by MOELCI II had it registered as a stock cooperative with the Cooperative Development Authority (CDA).
This has been the persistent call issued by the National Association of Electricity Consumers for Reform (Nasecore) to all electric cooperatives throughout the country.
The Local Government Code of 1991 grants franchise and real property taxation powers to city and provincial governments. The Code also provides exemption from such levies to CDA-registered cooperatives.
Nasecore have warned that unless electric cooperatives "become real cooperatives," consumers of its retail power will be hounded by additional pass-on charges arising from local government-imposed levies.
The country's 119 electric cooperatives were organized under Presidential Decree 269 or the Rural Electrification Act, and these are under the regulatory supervision of the National Electrification Administration (NEA).
The Supreme Court has ruled on June 10, 2003 that electric cooperatives are not exempt from franchise and realty tax levies unless these are duly registered as stock cooperatives with CDA.
Although the City Treasurer's Office had yet to officially transmit its tax assessment to MOELCI II, its general manager, Jemilo Pelimer, have disputed the computation.
Appearing before the provincial legislative board, Pelimer clarified that based on their own computation, MOELCI II only owes the city government some P2.7 million in actual levy, exclusive of penalties.
Pelimer also ruled out the possibility of a significant rate increase arising from the city government's tax levies.
MOELCI II operates in seven towns and two cities in Misamis Occidental, with around 80,000 megawatt-hours of power sold annually.
If the tax levies are passed on to consumers, it means some 14.5 centavos increase per kilowatt-hour, a computation done by the Freedom from Debt Coalition-Western Mindanao showed.
This can be higher if other local government units in MOELCI II's coverage area will follow the Ozamiz city government's lead in imposing the said levies, Sandoval worried.
