Power co-ops better off under RA 6938
Philippine Daily Inquirer
First Posted 04:19:00 12/04/2008
Filed Under: Electricity Production & Distribution, Legislation, Laws
This refers to the urgent appeal of the Philippine Rural Electric Cooperative Association (PhilRECA), National Association of General Managers of Electric Cooperatives (NAGMEC) and Association of Mindanao Rural Electric Cooperatives (AMRECO) to the Bicameral Conference Committee on House Bill 4312 and Senate Bill 2264 regarding the registration of electric cooperatives with the Cooperative Development Authority (CDA), as mandated by Republic Act 6938. (Philippine Daily Inquirer, 10/29/08)
We dispute four claims in that appeal:
1. The appeal said that the compulsory registration with CDA will violate consumers’ rights to form associations. We say the bills will clear up the confusion (caused by Presidential Decree 269) over the nature of electric cooperatives (ECs). Under PD 269, the ECs are not genuine: There is no “patronage refund” and “democratic control by members”—two basic, universally accepted principles of genuine cooperativism; the National Electrification Administration (NEA) has control over the ECs with the power to dismiss their managers and abolish their boards of directors.
2. The appeal said that the bills will allow a general assembly attended by less than the majority of all the members to convert ECs from coverage of PD 269 to RA 6938, thus violating the principles of self-determination and right to private property. We say, it is NEA that does not respect these principles. PD 269 states that EC members are “joint-owners” of the cooperative with “equity in the assets” to be determined according to patronage. NEA is treating EC members as mere consumers and doesn’t give them their rights and benefits as “owners.” After registration with CDA, the members’ equity may be computed as “share capital” and the members themselves will be entitled to receive interest and other benefits from the net surplus.
3. On the absence of strong regulatory body, the appeal stated that the electricity program will fail if the ECs are registered with CDA. We say, PD 269 was issued under martial law. In PHILRECA vs Department of Finance, (June 10, 2003), the Supreme Court ruled that the control of NEA was necessary because of the loans, mostly foreign funds, which were granted to the ECs. Control was required to assure payment. However, under Epira, the remaining unpaid loans have been condoned and assumed by the Power Sector Assets and Liabilities Management Corporation (PSALM). Hence, there is no more reason for NEA control. We have sufficient laws and regulations to protect the interests not only of the ECs but also of the member-consumers. NEA will continue to give financial and technical support.
4. On the impact on rates, the appeal said that under PD 269, the ECs are non-profit; if converted, the power rates will increase because of the return on investment. We say, in actual practice, most ECs under PD 269 are making profit. Hence, they are charged with corporate tax, franchise tax, business tax, real property tax and other taxes. After conversion, the ECs will be tax-exempt. This will result in lower rates.
EC consumers should get what is due them as investors and joint owners.
OTHONIEL GONZAGA, president, Electric Cooperatives Consumers for Reform Inc. (ELCCORE Inc.), Iloilo City
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