Power tug-of-war

By Francis Allan L. Angelo

The National Electrification Administration’s (NEA) recent actions against the Negros Occidental Electric Cooperative (NOCECO) has stirred debate and uncertainty among stakeholders in the power sector of the Philippines.

This contentious intervention raises significant questions about the autonomy of electric cooperatives and the balance of power between these entities and the NEA.

Advocates and members of electric cooperatives, like those involved with NOCECO, contend that the NEA’s authority has been exerted excessively, potentially jeopardizing operational continuity and subverting the principle of cooperativism. Attorney Rey Gorgonio, legal counsel for Negros Power Watch, argues that the NEA’s actions, particularly the ousting of NOCECO’s board and the suspension of its general manager, lack legal justification under the Cooperative Code of the Philippines.

This situation becomes complex due to the Philippines Cooperative Code of 2008 (Republic Act No. 9520) and the National Electrification Administration Reform Act of 2013 (Republic Act No. 10531). While the former may allow ECs certain tax exemptions or lower taxes, it also raises questions regarding the NEA’s jurisdiction over ECs.

There’s a conflict in the way ECs are governed: they do not have full autonomy or democratic control by member-consumers since the general manager, who is in charge of operations, is appointed by the NEA. This could undermine the decisions of the board of directors, who are elected by the General Assembly of the cooperatives​.

Moreover, the Cooperative Development Authority (CDA) has recognized NEA’s supervisory powers until new legislation harmonizes the conflicting provisions between RA No. 9520 and the supervision and regulation of electric cooperatives. This means that there should be an inter-agency respect, ensuring that agencies do not overstep into areas under the jurisdiction of another​ (Cooperative Development Authority)​.

The backdrop of this power struggle is the complex regulatory framework governing electric cooperatives in the Philippines. The NEA, under Republic Act 10531, wields substantial regulatory authority, including the power to supervise and, if necessary, intervene in the operations of electric cooperatives. However, the application of this authority has become a contentious issue, especially when the autonomy of cooperatives and the interests of member-consumers are perceived to be at risk.

The criticisms against NEA’s oversight are multifold. On one hand, there is a belief that the NEA’s intervention erodes the democratic control that members should have over their cooperative, contrary to the essence of cooperative principles.

On the other hand, it is also argued that the NEA’s involvement is essential to ensure operational and financial standards are met, especially in the context of a nationwide push for rural electrification and reliable power distribution.

Furthermore, the debate extends to the very nature of electric cooperatives in the country. Although electric cooperatives operate under the cooperative model, there is an argument to be made that they do not function as true cooperatives in the spirit of Philippine laws, such as Republic Act No. 9520, which would afford members full ownership and control.

NEA’s control over the appointment of general managers and other critical decision-making processes seemingly contradicts the notion of member-driven governance.

Moreover, the NEA’s approach is contrasted with the performance of private distribution utilities, which, due to greater financial resources, have often been more agile in implementing infrastructure upgrades and technological innovations. The calls for privatization, endorsed by senators such as Raffy Tulfo and Sherwin Gatchalian, point to perceived inefficiencies and advocate for private sector solutions to enhance service quality. The experience of MORE Power in Iloilo City, which led to significant improvements in service and cost reductions, is frequently cited as a successful model of privatization.

This debate is not just a matter of regulatory technicalities—it represents a deeper discourse on the future of power distribution in the Philippines. Should electric cooperatives strive for greater independence and member control, or is the oversight and potential intervention by the NEA a necessary mechanism to ensure reliable and efficient power distribution, especially in rural areas?

As the controversy unfolds, the essential need for due process, transparency, and respect for cooperative principles remain at the forefront. The outcome of the legal challenges, including the petition for certiorari filed before the Court of Appeals by former NOCECO board member Edmund Arceo, will have significant implications for the governance and autonomy of electric cooperatives in the country.

In the interim, the power sector must navigate a landscape of uncertainty. The case of NOCECO may well become a watershed moment in determining the trajectory of electric cooperative governance and the role of the NEA in the Philippines. It is incumbent upon all stakeholders to engage in this debate thoughtfully, with an eye toward balancing regulation, autonomy, and the unwavering goal of electrification for all.