Upon the pronouncement of many government provisions affecting the power industry, PENELCO has all the reasons to comply with the continuing requirements of the different government sector in the country, particularly in its franchise area, the province of Bataan.

Taxes in different types has been imposed on PENELCO, the latest of which are the Real Property Tax, Franchise Tax, Business Tax, and the Value Added Tax. The first three of the above-mentioned taxes are levied by the Local Government of Bataan through its City and Municipal government.

In order to address this issue, the league of Municipal Treasurers held a dialogue with PENELCO last February 15, 2006 at PENELCO Main Office' Leadership Hall. This forum aimed to clarify the gray areas on the basis for the said taxes particularly the Business Tax.

Ms. Lorena R. Capiral, Chief Accountant of PENELCO clearly explained the nature of the power industry and the type of service provided by PENELCO, that is the distribution of electricity. She also presented the latest Energy Regulatory Commission (ERC) Order on the Tax Recovery Adjustment Mechanism Formulae discussing apparently the basis of the Local taxes and the manner of incorporating these taxes in the electricity rates as prescribed by the ERC. Engr. Loreto A. Marcelino, General Manager, headed the PENELCO group in addressing the queries of the municipal treasurers stating clearly that PENELCO is taxable only on its distribution charges. Charges corresponding to NPC and TransCo does not form part of PENELCO's gross receipts and should be levied directly to the respective Generation and Transmission Company.

This argument was supported by ERC Resolution on the Value Added Tax where only Distribution Charges were subject to ten (10%) percent effective November 1, 2005 and twelve (12%) percent starting February 1, 2006, in compliance with RA 9337 (Vat Reform Law).

The issue was settled with Mr. Amado Jimenez of the City of Balanga requesting GM Marcelino for PENELCOs support for their tax collection from the National Power Corporation and the National Transmission Corporation. `PENELCO offered to write NPC and Transco regarding this matter and raised the idea of conducting a similar forum with the Generation and Transmission Companies. To top it all, it is evident that both the Local Government and PENELCO have one goal of serving the people of Bataan. And we are lucky to have these two agencies work hand in hand not for their own benefit but for the benefit of all. (renee rose tomas)