NEA chief to amend criteria for EC categorization

MANILA, Philippines — The National Electrification Administration (NEA) is set to make significant changes to the parameters used in the classification of the country’s electric cooperatives (ECs), with financial management to be given importance.

“I am bent on amending the categorization process,” NEA administrator Antonio Almeda said, adding that “I want a reflection of the true state of operations, both on technical and financial management.”

Almeda said he would implement major amendments into the criteria involved in the categorization process, with the aim of putting emphasis on the financial management parameter.

“Financial management, for me, would be a big reflection of how the day-to-day operations and the level of accomplishment or level of efficiency of a certain cooperative will be put into figures,” Almeda said.

“Financial management is the bulk for me because I am taking it from the idea that it is the consumers’ money. It is not the money of the cooperative, but it is the money of consumers and it’s in my mandate that I have to protect the money of the consumer-members,” he said.

Almeda said that under the present categorization criteria, financial management is given the same weight with the others.

“But I have to give it much (more weight). So there will be cooperatives for sure that will go down in categorization,” he said.

Almeda recently learned that one EC, despite being rated AAA, has a debt of P1.5 billion.

“This is a residual account, but then again it has to be addressed. A debt is a debt. It won’t go away if you will not pay. Since it’s a AAA EC, I suppose it has retained earnings at the end of the year so you have to allocate something to pay off a residual account,” Almeda said.

Based on NEA’s 2021 EC Overall Performance Assessment and Size Classification, 87 out of 121 ECs, or 72 percent, were rated AAA, up from 85 ECs that obtained the rating in 2019.

The performance assessment for 2020 operations was deferred due to the adverse impact of the COVID-19 pandemic on the overall performance of the ECs.

For 2021, nine ECs were rated AA and five received A, while seven were under Category B, six for Category C, and seven for Category D.

The AAA rating is the highest score given by the NEA to ECs that indicates the power distribution utilities’ full compliance on all parameters, with the D rating being the lowest.

Almeda said ECs categorized from AAA down to B has a high collection efficiency averaging from 90 to 100 percent.

Meanwhile, he said the average collection efficiency of ailing ECs stands at only 30 to 40 percent.

He said there are technical factors, as well as non-technical reasons, affecting the low collection efficiency of these ECs. Non-technical reason are comprised mostly of pilferage.

“So it is a big task for us to help these coops have infrastructure, the system and the warm bodies to increase their collection efficiency,” Almeda said.

NEA is mandated to carry out the total electrification of the country on an area coverage basis, with the 121 electric cooperatives as the implementing arm.