POSITION PAPER 1

Who are the real owners and who can control the Electric Cooperatives of the
Philippines? What is the role of the National Electric Administration (NEA) to
these Electric Cooperatives?

Electricity in the Philippines is distributed by 152 electrical distribution utilities,

121 of which are electric cooperatives (EC) (NEA, ECS Surpass Consumer

Connections Target for 2021, 2022). These 121 electrical cooperatives are private

member-consumer-owned businesses that are independent of the government. The

government's control over electrical cooperatives is generally limited to ensuring that

they provide safe, reliable, and affordable services to their members. Supposedly, the

government does not interfere with the day-to-day operations of electric cooperatives or

dictate their business decisions. The actual owners and controllers of an Electric

Cooperative should be its member-consumers and board of directors, elected through

democratic processes, with the National Electric Administration playing, strictly, a

regulatory role focused on ensuring fair service and pricing for the cooperative's

members.

Electrical Cooperatives are and should be operated by the people, for the people.

ECs are owned by the very communities they serve, thus, embody the principles of

democratic governance and local empowerment. Members have the right to vote on key

decisions, elect representatives, and shape the cooperative's direction.

This is backed by the Republic Act No. 6930, also known as the “Cooperative

Code of the Philippines”, which underscores the principle of the autonomy of

cooperatives. Cooperatives are expected to operate independently, free from undue

government interference in their internal affairs and decision-making processes. This

gives the members of the EC’s democratic control over their affairs.

With the member consumers having control of the Cooperatives, the projects of

the EC’s would prioritize the welfare of the people over profit. This is evidence through

the electrification of very rural areas that from a business standpoint yields low income

yet is serviced and maintained by the cooperatives. An example of this would be

BENECO’s “POBLACION KN SEP PROJECT” where 5.06 million pesos was used to

electrify just about 32 homes in the sitios Lipucan, Abbas, Tanap and Mayos located at

the mountains of Poblacion, Kibungan.

While the cooperatives are controlled and operated by the board of directors

voted by the member consumers, an independent party is needed to ensure that the

decisions made by the board are for the benefit of the community. That independent

party is the National Electric Administration. The National Electric Administration, must

stick to its role, not as a controller, but as a steward that oversees the fairness and

integrity of EC’s without influencing their operations. NEA's intervention is not meant to

replace the autonomy of electric cooperatives but to provide support and oversight to

ensure that they fulfill their mission of providing reliable and affordable electricity to their

respective communities.

The Republic Act No. 1053, gives the NEA the power to conduct investigations,

referenda, and other actions on matters related to electric cooperatives. It has the

power to implement preventive or disciplinary measures, including the suspension,

removal, and replacement of board members and officers deemed necessary. However,
this can only be done when there is sufficient evidence of the ailing of a cooperative or

corruption or misconduct among the board members.

The said law is what makes NEA strictly a supervisor of electrical cooperatives,

not a controller. Furthermore, if NEA were to interfere with the operations of a

cooperative with insufficient evidence of ailing or corruption within a cooperative, they

may face resistance from the member-consumers. One instance of this happening was

the takeover of BENECO two years ago where NEA stormed the BENECO

headquarters with police in full gear and seized control of all operations. This event

caused massive protests among member-consumers and the local government. A

statement from PHILRECA denounced the forceful takeover of BENECO claiming that it

was unwarranted and unjustified “NEA may have the power to deputize law

enforcement to enforce a decision in the exercise of its adjudicating powers, but this is

not a case of adjudication”. Due to the massive protests, control over the headquarters

of BENECO was returned to the member-consumer-owners (De Vera, 2021).

The electricity distribution in the Philippines involves 152 utilities, with 121 being

electric cooperatives (ECs). These ECs, private and member-owned, operate

independently, with government oversight focused on ensuring safety and affordability.

Democratic principles guide ECs, allowing members to influence decisions. The

Cooperative Code emphasizes their autonomy, and Republic Act No. 1053 empowers

the National Electric Administration (NEA) to oversee, not control, ECs. NEA's

intervention aims at ensuring fairness, with the power to act in cases of evidence of

wrongdoing. However, improper interference can lead to resistance, as seen in the

controversial takeover of BENECO.

 The Philippine electrical system, particularly the role of electric cooperatives,

reflects a commitment to democratic governance and local empowerment. The

Cooperative Code and related legislation establish the autonomy of cooperatives,

emphasizing their member-driven nature. The NEA serves as a regulatory body,

ensuring fairness and integrity without direct control. While NEA's intervention is vital for

maintaining accountability, recent events, such as the contested takeover of BENECO,

underscore the delicate balance needed. It emphasizes the importance of respecting

the cooperative model and involving member-consumers in decision-making processes.

Ultimately, the challenge lies in maintaining a cooperative's autonomy while upholding

standards for the benefit of the community.

References:
De Vera, S. (2021, October 22). Employees, coop members ‘take back’ Beneco on 3rd

day of NEA takeover. RAPPLER. https://www.rappler.com/nation/employees-

coop-members-take-back-beneco-nea-takeover/#:~:text=NEA%20ordered

%20the%20police%20%E2%80%9Cto,caused%20alarm%20and%20frightened

%20employees.

NEA, ECS SURPASS CONSUMER CONNECTIONS TARGET FOR 2021. (2022,

March 25). https://www.nea.gov.ph/ao39/738-nea-ecs-surpass-consumer-

connections-target-for-2021#:~:text=The%20National%20Electrification

%20Administration%2C%20in,by%20the%20current%20health%20crisis.

R.A. 6938. (n.d.). https://lawphil.net/statutes/repacts/ra1990/ra_6938_1990.html

Republic Act No. 10531 | GOVPH. (2013, May 7). Official Gazette of the Republic of the

Philippines. https://www.officialgazette.gov.ph/2013/05/07/republic-act-no-10531/