‘BEEF UP OR FIZZLE OUT’: Philippine electric coops at modernization crossroads

By Francis Allan L. Angelo

In an era where technological advancements are revolutionizing industries, Philippine electric cooperatives, a lynchpin in the country’s rural electrification since the 1960s, find themselves at a crossroads.

The recent Senate hearing on the franchise of Negros Electric Power Corp. was a stark reminder that the electric utilities sector must adapt to the rapid pace of development or risk obsolescence.

During the hearing in March 2024, Senator Grace Poe probed the capabilities of electric cooperatives to support burgeoning development in their respective franchise areas.

“Do you have the capitalization needed, for instance, if call centers relocate or new hotels open? Can you electrify all of them?” she questioned.

Her challenge was a call for a reality check within the electric power industry, particularly targeting the traditional electric cooperatives that might lack the fiscal muscle and expertise to fuel the country’s growth engine.

Senator Poe’s interrogation went deeper, examining the technical and corporate proficiency of cooperatives like the Central Negros Cooperative (CENECO).

She highlighted that electric cooperatives such as Central Negros Cooperative (CENECO) may lack the necessary technical knowledge and corporate competence to meet the developmental needs of modernizing towns. It is also possible that they can no longer provide the necessary expertise in developing areas.

“Alam nyo, iba na ang development ngayon. Noon kasi electrification. Ngayon, umunlad na kasi ang mga bayan (Development has evolved. Before it was purely electrification. Now, the country is developing and progressing). Unfortunately, cooperatives may not have the technical knowledge or the corporate competence to be able to supply the power needed in those areas,” she added.

Tony Peralta, chairman of the ECCP-Southern Mindanao Business Council, echoed these concerns, stating that cooperatives have fulfilled their initial purpose but now struggle to keep up with fast-paced rural development.

“Most impoverished or economic backwaters in the country, like those in Mindanao, are served by Electric cooperatives,” Peralta pointed out to Daily Guardian on Air, suggesting a correlation between cooperative service areas and economic stagnation.

Peralta also underlined the need for modernization, hinting at an outgrowth of purpose for these cooperatives.

He argued that their continued operation as-is might be the number one reason why some areas remain economically stunted.

“Electric cooperatives have outlived their primary purpose more than 50 years ago. They should beef up or risk becoming obsolete. They cannot shore up their service in their current state of affairs,” Peralta said.

However, the path to modernization is strewn with legislative hurdles.

Laws like those from the National Electrification Administration (NEA) and the Electric Power Industry Reform Act (EPIRA) are seen as too constrictive, often stifling innovation and autonomy in cooperatives.

These laws demand cooperative compliance for major investments and pit them against private competitors, despite the coops’ limited resources.

Rural electric cooperatives face a multi-front battle: gaining autonomy to make swift, member-focused decisions, securing necessary financing, and eradicating internal corruption and mismanagement.

Addressing these challenges necessitates amending restrictive laws to empower cooperatives to meet the needs of the modern Philippine electricity consumer.