Electric coops underrated-A A +A
Wednesday, March 6, 2013
THE buzz in the power sector is that electric cooperatives (ECs) have become the weakest link in the industry and this, among others, has emboldened the government to make serious its bid for a private sector participation (PSP) for distribution utilities.
This has unsettled a lot of ECs. Already maligned for allegedly imposing high power rates, the ECs are also confronted with the task of proving their own worth and worthiness pursuant to key performance indicators and regulatory measures. And once Pres. Aquino signs the new bill on the National Electrification Administration (NEA), the ECs will expect more heat from the kitchen since a key provision therein is good governance. Even the hearings on the NEA bill before the Joint Congressional Power Commission did not spare disdain for ECs which have opted to remain as non-stock and non-profit. The noose is just getting tighter for ECs under the NEA.
A national daily mentioned in its Feb. 26, 2013 editorial that electric cooperatives must be restructured to achieve good governance and more economic aggregation. The suggestion came after business groups identified the performance of electric cooperatives as “one of the four low hanging fruits” of the energy sector.
Well, I have no issue against good governance. The role of the Board of Directors is really crucial and something must be done to keep them abreast of the dynamics of a highly technical and financially demanding industry. But what I crow about is that in the power industry, there seems to be an unofficial conspiracy to pin the woes on electric cooperatives.
These developments though are discomforting. It appears that the new scorecard for EC performance is profitability in its literal sense. That’s why all eyes are on the Albay Electric Cooperative (ALECO) and the Abra Electric Cooperative (ABRECO) if they could do a rebound. If unable, they might provide the template for a PSP, or plainly, privatization. Now, that’s something blue chip ECs would not want to happen.
ECs are non-stock and non profit. Their rates are mostly “pass through” charges for those big transmission cables and 75 megawatt or more generation companies. There are taxes also to contend with aside from the so called universal charges that burden electricity consumers all over the country the costs for watershed protection, debt amortization and the provision of energy for off grid clients.
The flak is on the ECs. That’s understandable. They are at the frontline of the energy supply chain. They would out rightly be on the receiving end for gripes on any glitch on power. Until now, people just can’t seem to comprehend the essence of unbundling the industry and of the rates themselves. What we are driving at is that ECs must be judged on a case to case basis. Not by wholesale analysis that ECs are responsible for the dimming of the power industry. As Prof. Wally del Mundo of the National Engineering Center at UP Diliman says, the ECs remain to be the key to reducing the power rates in the country. They have no ambition to earn millions and they were structured to convey to the grassroots the government’s mandate for rural electrification.
That’s why ECs should not be underrated. Neither should they be overrated. But the least cost, I understand, would be to keep them intact. As long as they perform, let them be. Unless the situation calls for the panic button, ECs should be respected. Privatization should be an exemption, not the rule.
Now, as to the issue of ECs overcharging the public, let’s drag the ERC to this concern.
After all, it is this government agency that gives the formula for rate computation.
Published in the Sun.Star Baguio newspaper on March 06, 2013.