The dispersal of industries to the countryside has long been the government’s goal to spur widespread development, but spreading out the opportunities for progress can only happen with an efficient electricity supply.

Such a prospect is nearly impossible with inefficient electric cooperatives handling the power distribution.

Dominant energy firm Manila Electric Co. (Meralco) is pushing a partnership model with rural electric cooperatives to close a reliability and investment gap that keeps industries clustered in and around Metro Manila, a senior Meralco executive said.

Meralco senior vice president and head of Strategic Distribution Utility Partnerships and Acquisitions Arnel Casanova, in an interview with DAILY TRIBUNE’S online show Straight Talk, said Meralco services only about three percent of the country’s total land area: Metro Manila, Cavite, Rizal, Bulacan, and parts of Pampanga, Laguna and Batangas. Roughly 120 electric cooperatives serve the remaining 97 percent.

Yet that three percent accounts for 55 percent of the country’s total power consumption, Casanova said, because businesses locate where the power supply is reliable.

“We want to help develop the whole country by empowering, not taking over, electric cooperatives as partners,” Casanova said.

He said the initiative infuses capital and technology into cooperatives so they can meet industrial demand and drive economic growth outside Meralco’s franchise area.

System losses averaged nearly 17%

Data from the Distribution Utility Reliability Performance workbook of the Department of Energy showed system losses averaging 16.93 percent across nine reported years from 2011 to 2020, with no figure available for 2016.

System loss climbed steadily from 18.07 percent in 2011 to a high of 23.52 percent in 2015, before declining to 12.88 percent in 2018 and 12.56 percent in 2019. It ticked back up to 14.68 percent in 2020.

Electric cooperatives nationwide also posted an average System Average Interruption Frequency Index (SAIFI) of 40.42 interruptions and System Average Interruption Duration Index (SAIDI) of 6,580.76 minutes from 2015 to 2025, both well above the Energy Regulatory Commission’s benchmarks of 20 interruptions and 2,700 minutes.

Reliability improved markedly by 2025, when the average SAIFI fell to 21.40 and SAIDI to 3,176.88 minutes, though both figures remained above the ERC standard.

Capital hard to come by

Casanova said cooperatives, as non-stock, non-profit entities, cannot easily raise capital expenditures fast enough to keep pace with rising industrial demand.

“Electric cooperatives often lack the financial capability and technology to immediately invest — for instance, building a substation worth hundreds of millions of pesos,” he said.

Meralco, by contrast, can move immediately on substation construction and line upgrades, he said, citing Laguna’s 20 economic zones, all of which sit inside Meralco’s franchise area.

Casanova said the partnership model relies on Section 57 of the Electric Power Industry Reform Act of 2001, which allows electric cooperatives to convert from non-stock, non-profit entities into stock corporations.

Under the model, member-consumers of a converting cooperative become stockholders and direct owners of the resulting distribution utility.

Meralco then infuses capital by subscribing to additional shares in that stock corporation, alongside what Casanova described as 123 years of operational experience as the country’s most modern distribution utility.

Casanova confirmed that Meralco takes a majority equity stake in these arrangements, which he said is necessary to justify the scale of the investment involved.

“We take a majority equity stake because that allows us to invest the necessary billions of pesos to upgrade systems, professionalize management, train staff, and modernize operations,” he said.

Casanova described the initiative, led by Meralco and its chairman, Manuel V. Pangilinan, as a nation-building effort, and cited the company’s involvement in rural electrification projects in areas such as Quezon province.