We had received a copy a letter of a group of concerned BOHECO II consumers. After airing questions on the matter previously, we are bound to comment on the context of this letter. With comments. The reasons stated should be questioned for further clarification of both sides. After wading through legal verbiage the following information came out thus: there was a law in 2001, which either asks or commands – we do not know which - electric cooperatives to conduct a referendum to let members/consumers/patrons et cetera decide whether to become a stock cooperative or stock corporation.

We say we do not know because have not read how the law is precisely worded. If the verb used was must, then it is obligatory and this carries with it penalties for violations or non-compliance. If the verb used is may, then the enforcement is optional no penalties will be imposed. But if the word used is shall with no penalties are defined, then compliance may be debatable.

The operative word here is stock, which is translated as money. What stock means is investment, money invested from each member, not from the government or charity institution but from the member. That is unless the government or charity institution pays for the investment of each member, which is highly unlikely. For a patron or consumer becomes a member of a corporation or cooperative, he must put up a specified amount of money.

A member may derive capital investment from the money paid in excess of operating cost so states an article in the BOHECO II by laws. BOHECO II say, what excess? We are operating at a loss. BOHECO II like any other electric cooperative is a power retailer. That is; an electric cooperative buys power wholesale from the National Power Corporation or from some other independent power provider. Then the cooperative transmits power to users. Money paid by users is used to pay for power purchase and operating cost. The transaction may result as a loss, breakeven or profit depending on the balance.

Since an electric cooperative can be considered a virtual monopoly, loss is least expected. It can dictate prices unless regulated. But the government regulates the prices of power either purchased wholesale or retail. Profit therefore depends on the size of operating costs. Operating costs is divided into administrative expense – salaries, honoraria, allowances etc and transmission and distribution costs. And miscellaneous, which is sometimes questionable. What enter into the transmission and distribution costs are systems losses.

There are two types of systems loss, the acceptable and unacceptable. Acceptable losses are those caused by natural calamities, force majeur they say. Those may be covered by insurance. Short circuits may be one of the causes of loss and so is power theft. The former could be acceptable to a limited degree while the latter is not. Effective management reduces systems loss to acceptable limits.

To determine if there is profit in the transaction an audit may be conducted. CPAs are considered cordon bleu chefs in cooking up books. Profits can be recorded as losses depending on how the equation is written. An independent audit mutually agreed upon is then necessary to satisfy contending parties. Perhaps that would be the solution. If there is enough profit declared so a member may be credited with paid up capital then a change to a stock cooperative may be mandatory but if not there is no other choice but a status quo.