CDA registration: better for EC members

We would like to thank Reginald B. Tamayo for his letter “Allow ECs to exercise their right to choose.” (Inquirer, 5/4/12)

It is disappointing though that Tamayo failed to mention that there is a law that mandates electric cooperatives to choose between two options. Section 57 of the Electric Power Industry Reform Act (Epira) of 2001 states: “Electric cooperatives are given the option to convert into either a stock cooperative under the Cooperative Development Act or stock corporation under the Corporation Code. Nothing contained in this Act shall deprive electric cooperatives (ECs) of any privilege or right granted to them under Presidential Decree No. 269, as amended, and other existing laws.”

Between a cooperative and a corporation, the National Association of Electricity Consumers for Reforms Inc. (Nasecore) prefers the cooperative because it establishes and recognizes consumer ownership of the electric cooperatives and promotes the equitable distribution of wealth.

Had Tamayo cared to look into the by-laws of the electric cooperative in his place, he would have found out that Section 1, Article 2 of the EC by-laws clearly states: “The members are the joint-owners of the Cooperative, with their individual equity in its assets determined on the basis of their patronage.” And consumers just have to look into their monthly electric bill that shows their monthly capital contributions indicated as “RFSC,” meaning, Reinvestment Fund for Sustainable Capital Expenditures, which ranges from P0.1518/kWh to P0.5324/kWh depending on the ERC-determined category of the electric cooperative.

Members of a genuine cooperative are very much aware, owing to their cooperative’s sustained members’ education, that cooperatives registered with the Cooperative Development Authority (CDA) enjoy numerous tax exemptions that directly benefit them. It is unfortunate that the ECs under the National Electrification Administration do not enjoy these benefits, thus the Energy Regulatory Commission (ERC) in 2010 promulgated the Rules for Setting Electric Cooperatives-Wheeling Rates (RSEC-WR) where the ECs were given a “provision for tax,” (allowing them to pass their tax liabilities on to their consumers) which was a departure from its previous decisions, issued mostly in 2004, on the rate unbundling applications of ECs.

As to the rates of the ECs, the ERC determines these (distribution, supply and metering charges on a per kilowatt-hour basis), based on the principle that the ECs are entitled to recover their just and reasonable costs through an annual revenue budget (also called “requirement”), which the ERC approves. Regrettably, the ERC does not have the capability to audit the ECs’ actual annual revenues vis-à-vis its approved annual revenue requirement, yet it prefers not to seek the assistance of the Commission on Audit.

We strongly believe that if the ERC will just be bold and conscientious in doing its mandate of ensuring that rates are just and reasonable, consumers will be forever grateful because the rates will naturally go down.

—PETE L. ILAGAN,

president,  National Association

of Electricity Consumers

for Reforms Inc.

[email protected]