BENECO’S BID FOR CDA REGISTRATION

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Presidential Decree (PD) 269 issued by former President Ferdinand E. Marcos established the National electrification Administration (NEA) that facilitated the creation of rural electric cooperatives in the different parts of the country to work out the implementation of the government’s rural electrification program as part of the overall strategy to spur economic growth in the countryside. The NEA was authorized to provide the needed loans to the established electric cooperatives to help in immediately providing electricity to the growing population and become the vehicle for the improvement of economic activities of the people in the different parts of the country for them to have sustainable sources of livelihood that will contribute in efforts to improve the living condition of their families.

Republic Act (RA) 6938 which created the Cooperative Development Authority (CDA) mandated the registration of all cooperatives, including electric cooperatives, to the CDA and for non-registered cooperatives not to use the word cooperative in their corporate names. Subsequently, RA 9136 or the Electric Industry Power Reform Act (EPIRA) provided options for power distribution companies to register with CDA, maintain its registration with NEA or register with the Securities and Exchange Commission (SEC) as a stock corporation.

One of the electric cooperatives that was established pursuant to the provisions of PD 269 was the Benguet Electric Cooperative (BENECO) which was given the franchise to operate, manage, administer and maintain the distribution system in Baguio city and Benguet. BENECO was considered to be an ailing cooperative in the late 1980s because of its alleged failure to settle its obligations with concerned government agencies, high systems loss and problems between the management and the members of the Board of Directors that compelled the NEA to takeover the same for the benefit of the welfare of its consumers. After nearly 3 decades of having an effective and efficient management, BENECO has become one of the top performing electric cooperatives in the country with a single digit systems loss, quality and reliable distribution system, effective and efficient collection system among others that allowed it to be classified as one of the triple A electric cooperatives in the country.

On the other hand, BENECO attempted twice to registered with the CDA but the consumers overwhelmingly rejected the decision of management and the members of the Board of Directors to register because of the fact that the CDA does not have the technical expertise to supervise the operation of service utilities like the electric cooperatives whose power distribution services are endowed with public interest. Further, the CDA does not have regulatory powers over the electric cooperatives compared to the present situation wherein NEA regulates the operation of the electric cooperatives while the Energy Regulatory Commission is in charge of regulating the power rates of private and public power utility companies.

Lately, RA 10531 or the revised NEA law was enacted that clearly provides that electric cooperatives can opt to register with CDA but the same will still be regulated by the NEA and ERC in terms of their operation and rate-making another technical matters. For the third time, BENECO will attempt to register with the CDA that is why it is currently crafting the constitution and by laws and articles of cooperation that will govern the firm’s registration with the new regulatory body. However, the articles of cooperation crafted by the management and the members of the Board of Directors are totally different from each other. In the case of the by laws that was prepared by the management, it embraced policies and systems applicable to the present status of the electric cooperative while the by laws that was prepared by the members of the Board of Directors virtually used as a template the by laws used by ordinary cooperatives in their operation.

We believe there is nothing wrong for BENECO if it will register with the CDA provided that the bylaws that will be crafted will be useful to the prevailing situation of the electric cooperative. Let us allow BENECO to be regulated by the existing regulators while allowing the CDA to work on what will be its defined duties and responsibilities. The status of the electric cooperative in the power distribution industry should be sustained through the continuous improvement in its operation. Let us not allow our electric cooperative which worked hard to gain a decent status in the industry to be affected by whatever its plans for its future. Let us help the cooperative embrace ways on how it will be able to maintain its status and free from being taken over by private companies that will surely result to the imposition of higher rates. While it is true that there will be a slight adjustment on the existing power rate once BENECO will be registered with CDA, the increase in electricity rate will translate to the benefit of its existing residential consumers because the funds that will be generated will be plowed back to the consumers in terms of dividends or patronage refund while the proceeds of the increase that will be collected from the juridical persons will be similarly prorated for the dividends of the individual consumers.

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