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City to block Bohol Light renewal of franchise

City to block Bohol Light renewal of franchise

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City to block Bohol Light renewal of franchise

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NOTE: THIS STORY WAS FIRST PUBLISHED IN THE BOHOL CHRONICLE’S SUNDAY PRINT EDITION.

An application for the renewal of the Certificate of Public Convenience and Necessity (CPCN) filed by Bohol Light Company Incorporated (BLCI) before the Energy Regulatory Commission sparked opposition from the Local Finance Committee (LFC) of the City of Tagbilaran for its failure to secure a business permit from “2009 up to present.”

Also, an assessment of business taxes and other fees issued by the City Treasurer’s Office in the amount of PhP42 million, more or less from “2009 up to present” against BLCI “has been contested by BLCI through its filing of a civil case for nullification of franchise tax billing statement with an injunction pending before the Regional Trial Court (RTC) Branch 2, Tagbilaran City.” 

An unnumbered resolution was adopted by the 14th Sangguniang Panlungsod (SP) of the City of Tagbilaran authorizing City Mayor John Geesnell Yap, through the City Legal Office to file comments, intervention, and/or opposition to the application for the BLCI application for its CPCN renewal docketed as ERC Case No. 2021-012.

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However, BLCI told the Chronicle that its franchise to distribute electricity to the consumers in Tagbilaran City will expire on October 19, 2025, and is not the subject of the present ERC application for renewal of its CPCN.

A CPCN, as defined by ERC Resolution No. 5, series of 2008 refers to the authorization issued by the ERC to entities engaged in the operation of a transmission or distribution system that have been granted by a franchise either by Congress, or other vested entities under the old laws.

According to Eleuterio Regis in a press release “BLCI Insists on Lower Tax for Consumers Benefit”, that since the start of BLCI’s operations in the city, it has been paying franchise taxes based on its assessments until 2008.

However, starting in 2009, the city government changed the classification of its tax from franchise to the higher business tax based on a steeper tax rate ad a bigger base computation, according to the press release.

The Chronicle learned that the city assessed BLCI 3% tax based on gross revenue instead of .75% of gross distribution revenue.

The city government included in its tax assessment BLCI generation and transmission charges which are passed on to consumers or paid to Generation Companies (Genco’s) and to the National Grid Corporation of Philippines (NGCP).

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Genco’s pay their own local taxes while NGCP is required to pay a special franchise tax. 

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The BLCI press release stressed that generation and transmission charges are not considered revenues and as a distribution utility BLCI is only entitled to distribution revenues under Republic Act No. 9136 known as the Electric Power Industry Reform Act (EPIRA) of 2001. 

In a 2008 decision, the ERC ordered BLCI to pay franchise taxes based only on its distribution and wheeling and captive market supply revenues pursuant to the EPIRA and its implementing rules and regulations, according to the press release.

BLCI also clarified that while its case is pending in court, they have been “regularly paying franchise taxes to the city government based on the ERC decision. The city government has been accepting such payments without prejudice to the outcome of the court case.”

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BLCI’s pending court case questions the city governments’ assessment of a higher tax which will result in higher electricity cost, according to the press release. (Chito M. Visarra)

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