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Goverment urged to revisit policies on EC creation

There is a need for the government to revisit the policy in establishing electric cooperatives (ECs) so that they will have flexibility in serving their franchise areas, a business leader said.

Arturo M. Milan, president of the Davao City Chamber of Commerce and Industry, said that ECs, particularly those in growing areas like emerging urban centers, must be allowed to muster financial capability to optimize their services.

“The ECs in urban centers must not only be able to expand their services through rural electrification, but must also be able to immediately respond to the needs of its customers. At present, they cannot do it because they have no financial capabilities,” Milan, a top official of the Davao Light and Power Co. before his appointment as advisor of the Aboitiz Equity Ventures, told the TIMES.

At present, ECs, unlike other cooperatives, are non-stock non-profit entities that usually secure financial help from the National Electrification Administration (NEA), the national agency that supervises them.

Their personality, said Milan, prevents them from not only expanding their reach, but also from immediately resolving key issues like providing more power to their customers in a shorter period of time without necessarily draining the resources of the national government.

He said ECs that are profitable will also be held accountable by their consumers if they do not perform better because the same consumers are also their members. “The members can demand for better service, unlike now when they will only be allowed to participate in the general assembly (to choose their board of directors),” he added.

Assistant Secretary Redentor E. Delola agreed that it would be better for ECs to have a better financial position for them to respond to the needs of the consumers.

“Personally, I believe that, especially those in the growing areas, ECs must be capable enough to answer the needs of the consumers by becoming financially stable,” Delola said.

He said as the demand for power becomes bigger, especially in the emerging urban areas, “it is very hard for ECs to immediately respond because they do not have that flexibility as they need to apply for capital expenditures which takes time to approve.”

This is because the ECs, because they are non-stock and non-profit and the model is for rural electrification, have approved rates that do not include the concept of responding to immediate needs.

“There is a chance that (new) investors will not continue to invest because their demand for power cannot be met,” he added, although he pointed out that some ECs in some areas were able to come up with key solutions because they are managed well.

Edgardo B. Masongsong, NEA administrator, said that ECs must not be allowed to graduate to become for profit entities unless they are able to serve their main purpose. “Until the time that there are no more lifeline consumers, they must not be made to change their status.”

Based on the NEA data, about 30% of the 12.18 million consumers are lifeline consumers or those who consume power of about 50-kilowatt-hour a month.

“But we are open to converting ECs to become stock in a case-to-case basis,” Masongsong said, pointing out that there are those that have attained a certain level of efficiency in delivering power to their consumers.

Even ECs in urban centers must not be allowed to convert to stock cooperatives for as long as there are still poorer families that they need to serve, including those in the rural areas, he added.

Created in 1973 under Presidential Decree 269, a law that established the NEA for rural electrification, ECs are entities that are tasked to become power distributors but do not adhere to the principles of cooperatives because they are not stock nor for profit.

Among the principles that they do not follow, under the Philippine cooperative system are voluntary membership as their members are their consumers; control of the members as their management are designated by the NEA; and autonomy as they are under NEA supervision.


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