Electricity subsidies to electric coops: A never ending burden

Electricity subsidies to electric coops: A never ending burden | Daily Tribune

Only a week before 2023 ends, and as plans for 2024 are being penned, the spotlight on the energy sector turns to the issue of subsidies for electric cooperatives (ECs) which significant cause-oriented groups leading the charge have been pointing to.

As we enter 2024, a crucial question to the Department of Energy, particularly the National Electrification Administration, is, is there a plan in place to phase out subsidies that electric cooperatives throughout the country have been enjoying for half a century.

This is quite timely since a new year will also mean the government should surely be crafting new strategies that may aid Filipino consumers — and this is a low-hanging fruit.

According to analysts, the subsidies must be halted to cut the undue burden on taxpayers, who are not even customers of these electric cooperatives but unfortunately still carry the responsibility to aid in the survival of the ECs.

It was pointed out that unlike private distribution utilities, coops enjoy preferential treatment which breeds inefficiencies as evidenced by very poor performances in many provinces.

Case in point — electric coops have failed to invest in improvements to their distribution systems. Instead they have depended on government handouts for over half a century since coops were formed. Areas covered by ECs have continued to experience outages to this day. This is the reason many LGUs are turning to private utility companies like Meralco to take over.

This is on top of the longer interruptions provincial customers have to endure as measured by the system average interruption duration index that makes it clear that the government help has failed miserably and not been utilized properly.

These issues raise valid concerns about the effectiveness of the subsidies in improving service reliability.

Another intriguing matter raised is that customers of other distribution utilities, particularly Meralco, VECO, CEPALCO and others, have actually been subsidizing the electric coops for decades, not just through taxes but also through the Universal Charges Missionary Electrification fund.

Without the subsidies from these customers, the operation of the electric cooperatives would be unsustainable and would grind to a halt.

The call for a congressional review is a notable move considering these concerns. The pressing question then becomes: to what extent are private distribution utility customers financially supporting these ECs, and is it reasonable to expect these cooperatives to operate independently without continuous government assistance?

This is something that Philippine Rural Electric Cooperative Association (Philreca) Party-list Rep. Presley de Jesus should think about. He recently released a statement lashing out at Meralco, failing to see that the very organization he represents has been benefitting from the company, and how efficiency brings in more customers, more demand, and thus more subsidies.

De Jesus should maximize his power in Congress to look into the services of the electric coops in many parts of the archipelago and not to set aside the decaying performances of coops by diverting attention through misguided accusations.

Philreca should focus on keeping the power consistently on in the provinces to avoid business interruptions that definitely have an impact on the economy and on giving local residents the basic convenience they deserve every single day.

In the case of Meralco, the distribution utility has continued investing, leading to service improvements and performance excellence as its customers evidently experience rare power outages, if any.

This must be the enduring goal of the electric cooperatives — to better their systems to be at par with urban areas like Metro Manila that are served by effective DUs such as Meralco.