GENERAL SANTOS CITY — The National Electrification Administration (NEA) has ordered a forensic audit of South Cotabato II Electric Cooperative (SOCOTECO II) after uncovering what it described as “alarming” findings involving about ₱59 million in remarketing proceeds linked to the cooperative’s power supply agreements.

NEA Acting Administrator Antonio Almeda said investigators found that certain agreements allowed generation companies to sell unused electricity from SOCOTECO II’s contracted capacity to the spot market. One agreement cited involved Peak Power Incorporated, an embedded generation firm operating within the cooperative’s franchise area.

“These are bare allegations and unfounded conclusions,” Almeda said.

According to Almeda, the transactions generated roughly ₱59 million in remarketing fees.

“Some of SOCOTECO II’s power supply agreements allow its generation companies to sell unutilized capacity to the market,” he said. “Meaning, if there is excess power not dispatched to consumers, the PSA authorizes the generator to sell it to the spot market.”

He explained that under established energy sector rules, generation costs are treated as pass-through charges. Distribution utilities such as electric cooperatives collect payments from consumers and remit them to generation companies.

“It is an established rule that generation costs are purely pass-through costs,” Almeda said. “Distribution utilities are only collection agents. The ones who truly pay for these costs are the member-consumer-owners.”

Almeda stressed that earnings related to generation cost adjustments, such as remarketing proceeds, should benefit consumers.

“Kung ano man ang kinita dito sa remarketing, hindi pera ng SOCOTECO II ’yan. Pera ’yan ng member-consumer-owners,” he said.

Funds allegedly used as operating income

The NEA official said the ₱59 million remarketing proceeds were not recorded in accordance with cooperative accounting rules. Instead, the funds were reportedly deposited into SOCOTECO II’s internally generated funds and used as operating income.

“Ginamit ho ng SOCOTECO II management ito as operating income,” he said, adding that such use is prohibited under existing policies.

Almeda said the proceeds should have been returned to consumers through lower electricity rates.

“The ₱59 million that was earned should have been returned to the member-consumer-owners to reduce their power rates,” he said.

He added that the findings could expose the cooperative to regulatory action by the Energy Regulatory Commission, which may order refunds if violations are established.

Concerns raised by some member-consumer-owners (MCOs) and consumer advocates point to other alleged irregularities in the cooperative’s operations. These include claims of questionable financial assistance for mortuary or death-related benefits, allegedly inconsistently granted, lacking transparency, or not properly accounted for.

Other allegations include:

• Lack of transparency in the use of cooperative funds, including limited disclosure of financial assistance programs

• Possible misuse or misallocation of internally generated funds

• Decisions made without full board knowledge or consultation with member-consumers

• Concerns over governance and accountability mechanisms within management

NEA has not released findings on these additional allegations, but officials said the forensic audit will examine broader financial practices and institutional controls within SOCOTECO II.

Almeda said preliminary findings suggest potential governance lapses.

“After further investigation, hindi ho alam ng board na merong ganoong pera,” he said, suggesting that management may have acted without full board approval.