Greed behind DOE’s beef against electric cooperatives?
posted 7 days ago  ·  
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A hitherto unknown letter of Department of Energy (DOE) Secretary Alfonso Cusi addressed to the House of Representatives created a controversy last week when it became clear that he wanted the franchises of 17 electric cooperatives, including the First Catanduanes Electric Cooperative, Inc. (FICELCO),     cancelled or revoked, with the franchises granted to “potential applicants.”

Cusi described the cooperatives as “underperforming, financially and technically distressed”, citing Section 45 of Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) as the basis for the recommendation. Under this provision, the DOE and/or the Energy Regulatory Commission (ERC) may recommend to Congress the revocation of such franchise or privilege granted to electric cooperatives if they are in violation of the provisions of said Act.

The targeted cooperatives naturally raised a united ruckus against the Cusi recommendation to House Speaker Gloria Macapagal-Arroyo, with FICELCO and Palawan Electric Cooperative having the loudest voices as they are both in the upper spectrum of ECs as far as performance is concerned.

Based on the 2017 Electric Cooperative Overall Performance Assessment finalized by National Electrification Administration (NEA) in September 2018, FICELCO garnered a total score of 92.50% in four key performance standards, even attaining perfect ratings in financial and technical standards.

Together with the EC classification rating of 75%, the island’s cooperative had a total score of 89% for its 2017 performance, good enough for Category “A” rating.

In contrast, of the other 16 cooperatives in Sec. Cusi’s “hit list”, only Palawan Electric Cooperative (PALECO) has a similar rating at Category “AA.” Two electric cooperatives were categorized as “B” while seven were “C” and six were at the lowest category “D.”

What riled the officials of the cooperatives the most was that they were never informed of the recommendation, particularly the NEA which has supervisory power over them. NEA officials have reportedly denied ever making such a recommendation.

Of more import is the ironic statement of Section 27 of EPIRA, that very same provision that vested exclusively on Congress the power to grant franchises in the transmission and distribution of electricity also states that “ all  existing  franchises  shall  be  allowed  to  their  full  term.”

Therefore, in accordance with said provision, FICELCO’s 50-year franchise was granted by NEA on June 6, 1979, should be allowed to expire on June 5, 2029.

There seems to be an ulterior motive to the Cusi move, particularly after Congress successfully awarded a franchise to a new player to replace the expired franchise holder in Panay island.

It may be recalled that in 2015, a bill was filed in the House proposing the grant of a franchise to the Bicol Light and Power Corporation to operate a power distribution system in all six Bicol provinces.

No less than Prof. Rowaldo del Mundo of the University of the Philippines-National Engineering Center had warned then that the Bicol-wide franchise would in effect create a so-called “monopsony” in which there is a single buyer of electricity from power suppliers in the region.

“This will be like Meralco, which would allow Bicol Light and Power Corporation to sign power supply contracts on its own and without transparency and competitiveness,” he said, unlike in cooperatives in which such agreements would pass through the scrutiny of the board of directors elected by the member-consumers.

Whether it is Bicol Light & Power, or a power supplier casting moist eyes on captive markets like Catanduanes, that is behind the DOE plan remains to be seen.

FICELCO and the four other Bicol electric cooperatives in the Cusi list should not rest easy even if that Sec. Cusi has recalled the letter he sent to the House Speaker, who is suspected to be close to a particularly influential player in the power industry.


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