Takeover of electric cooperatives by private firms to result to higher rates


LA TRINIDAD, Benguet – Giant power companies are inclined on taking over good performing and ailing electric cooperatives in various parts of the country which would likely be disadvantageous to the consumers because of expected unabated increase in power rates, a local expert in the power industry said here Monday.

Gerardo P. Verzosa, general manager of the Benguet Electric Cooperative (BENECO), said the recent takeover of San Miguel Power of the bankrupt Abra Electric Cooperative (ALECO) and the takeover of the Manila Electric Company (MERALCO) of the Pampanga Electric Cooperative (PELCO) could also happen to other ailing and good performing electric cooperatives because Republic Act (RA) 10531 or the new National Electrification Administration (NEA) law allows private companies to operate the distribution systems of certain areas.

“Ten other electric cooperatives in the different parts of the archipelago are expected to be taken over by private companies in the future that is why we in the distribution business have to be at par with private companies in providing quality and reliable power at the least cost possible,” Verzosa stressed.

He explained private companies wanting to takeover good performing cooperatives entice consumers by offering more efficient and effective service which would result to increased power rates in the future because investors would recover the billions of pesos to be infused in operating the distribution systems as well as the return of investment for the money infused.

Verzosa claimed the takeover of private companies to the distribution system being administered by electric cooperatives would also result to the displacement of highly qualified and competitive personnel of the concerned electric cooperative to be taken over because the investors will bring in their own technical people whom they are comfortable working with.

“We have to elevate the delivery of quality and reliable power to our consumer to greater heights and keep our power rates down to prevent moneyed businessmen in the power sector from taking over electric cooperatives which would subsequently eroded the purpose of establishing the electric cooperatives to implement the government’s rural electrification program or bring power to the countryside,” Verzosa added.

Despite having to sustain the delivery of power to remote villages and ensure the energization of non-viable areas in the different parts of Benguet, which is part of its franchise area, Verzosa revealed BENECO is still able to keep its rate low at P9.04 per kilowatt-hour for residential consumers and P8.43 perkilowatthour for commercial consumers, which are way below the nearly P15 perkilowatthour being charged by MERALCO to its over 1.5 million consumers.

The BENECO general manager numerous sitios in the 13 municipalities of Benguet are programmed for energization under the national government’s rural electrification program in order to spur economic growth in the countryside but an abrupt takeover by a private company interested to take over the cooperative would result to the non-implementation of such missionary endeavour since the investors would be likely after the immediate recovery of their investments and the subsequent return of their capital including interests on the money that they have infused to the distribution system.

Verzosa said the decision if a takeover will be allowed or not will be lodged with the consumers during a scheduled referendum for the purpose of determining the pulse of the consumers whether they want private companies to manage the operation of their distribution system.

He said the appointment of independent members of the Board of Directors of electric cooperatives by the NEA will definitely help in the crafting of guidelines that will contribute in improving the services of the electric cooperatives provided that those who will occupy the positions of independent directors are those knowledgeable about the circuitous power industry.

“We support the appointment of independent directors to sit as members of the Board of electric cooperatives so that they will be able to share their expertise that would definitely improve the delivery of quality and reliable power to the consumers in the future,” Verzosa said.

According to him, the possibility of takeover by interested private companies of good performing electric cooperatives remains, thus, the privatization of the power distribution system would be up to the decision of the consumers.

However, Verzosa claimed the bottom line would be the expected significant increase in the power rates as against the quality of the service to be delivered by the private company whether it would be more efficient and effective compared to when the distribution system was managed by an electric cooperative.

By Dexter A. See