A power sector alphabet soup

A Senate plenary session last January 22, 2025 shone light on an alphabet soup pertaining to some important metrics in the power distribution industry, namely the SAIDI and SAIFI. Why does it matter to electricity consumers, and what was it doing in the mouths of the Republic’s senators?

To answer the latter question first, on that day, senators were deliberating on the franchise expansion of distribution utility Davao Light and Power Co. into areas currently covered by Northern Davao Electric Cooperative or NORDECO. A similar attempt was made before but was vetoed by President Ferdinand Marcos, Jr.

What is different now, aside from revisions in the proposed law, is a recent Supreme Court decision that reiterates the Constitution’s prohibition of exclusive franchises, which, in effect, allows Congress to award new franchises to introduce new competition, hence prompting erring power distributors (whether private utility or cooperative) to do better.

Tasked to uphold the common good — which, in that case, was having reliable electricity for Davao del Norte and Davao de Oro — the Senators were consulting the numbers (packaged in jargony abbreviations) to make an informed decision.

“Unfortunately, the services [of NORDECO] have not improved. The prices still remain between P3-4 more expensive than [in] Davao Light and Power,” said Senator Juan Miguel Zubiri.

Using the Department of Energy’s data on SAIDI (System Average Interruption Duration Index), or the duration of blackouts, Senator Zubiri also drew a contrast on the reliability of service between the two providers: “Davao Light has only 209 minutes a year… In NORDECO, it’s 242 minutes a month.”

Citing the SAIFI (System Average Interruption Frequency Index), or how many times power interruptions occur, Senator Zubiri said: “[Blackouts] in Davao Light is only an average of 3.1 times a year, [while] NORDECO is 4.9 times a month.”

NORDECO has since claimed that its SAIDI and SAIFI data presented by Senator Zubiri actually covers the span of seven months.

But what took Senators Zubiri and Koko Pimentel by surprise was the fact that the National Electrification Administration gave NORDECO a Double A rating — a rather high categorization — regardless of the aforementioned concerns.

“NORDECO, 242 minutes [average length of power outages] per month, and that is a Double A. Imagine [our kababayans] being serviced by an electric coop [that’s Category] B, C, and D,” Senator Pimentel said.

Beyond the alphabet soup, there are two levels as to why SAIDI (duration of blackouts), SAIFI (frequency of interruption), and the power cost is relevant and should be understood by consumers of electricity.

The first is on a personal level and is self-explanatory. Your home, your workplace, and your third place would almost always require reliable and consistently accessible electricity to fully function. Think of how a power interruption would be a great disturbance to a surgeon, much more to the person on the operating table; or how it would disrupt BPO employees and their work with overseas clients; or how schools would struggle to teach and administer tests.

At the same time, the cost of power should be affordable so that you can sustain your connection. It is worth noting that incomes and expenditure on electricity vary across different regions in the country. As I’ve pointed out before, the share of housing and utilities expenditure among Filipino households ranges between 14-30%, largely depending on where you are and whether that area is developed.

On the other level is whether or not your distribution utility is taking the necessary steps to ensure that you would have reliable and consistently accessible electricity in the future. One way to look at that is to check whether or not the service provider is putting their money where their mouth is, and if that actually translates into better SAIDI, SAIFI, and power costs over time.

A new report from the think tank Institute of Contemporary Economics or ICE found that seven electricity distribution cooperatives are putting the Panay and Guimaras grids at risk due to severe underinvestment in distribution infrastructure. This is genuinely concerning. From 2022 to September 2024, these cooperatives allocated a lowly 3.1-3.7% of total spending on infrastructure development, which suggests that “the nature of spending is essentially just maintenance capex (capital expenditure)”, according to ICE.

What’s the risk of underinvestment in upgrading infrastructure? Just look at what happened to the islands of Siargao and Bucas Grande last December when the sole submarine cable transporting electricity to the area broke down due to “natural wear and tear,” causing a 13-day widespread power outage.

In contrast, MORE Electric and Power Corp. (which, by the way, is only in its fifth year of operations) started with a capex of P2 billion to immediately upgrade its predecessor’s infrastructure in Iloilo City. In that span, there was a reduction in system losses and about 38,000 additional household connections in MORE’s franchise area.

Continuously experiencing blackouts and the high costs of electricity are enough reasons for consumers to demand for better services with the same provider or with someone else, as the Supreme Court clarified. But actually understanding SAIDI, SAIFI, and the rest of the alphabet soup gives us the ammunition to debunk propaganda and effectively argue — on objective terms — for the changes we would want to see.