Should electric cooperatives register with CDA?

This refers to the urgent appeal published in the Philippine STAR on October 29, 2008, and signed by the presidents of PHILRECA, NAGMEC and AMRECO. The appeal was addressed to the Bicameral Conference Committee of Congress on HB 4312 and SB 2264 regarding registration of electric cooperatives to the Cooperative Development Authority under RA 6938.

The appeal raised four issues which, the signatories claim, are inimical to the interests of the consumers of electric cooperatives.

We dispute their claims as follows:

1. On compulsory registration: The appeal stated that the pending bills will violate consumers’ rights to form associations. We say that the bills will correct and avoid confusion on the nature of electric cooperatives created under PD 269. Said cooperatives are not genuine, so they do not follow the universally accepted principles of a cooperative. Under PD 269, there is no “patronage refund” and “democratic control by members” — two basic principles of a genuine cooperative. The NEA has control over the electric cooperatives with the power to dismiss the manager and abolish the board of directors.

2. On legislated conversion: The appeal stated that the bills will allow conversion from PD 269 to RA 6938 to be decided in the general membership assembly attended by less than the majority of all members. Hence, it will violate the principle of self-determination and right to private property. In reply, we say it is ironical because NEA is the one not following these principles. The By-Laws of the cooperatives under PD 269 state that the members are “joint-owners” of the cooperatives with “equity in the assets” to be determined according to patronage. NEA is treating the members as mere consumers. The rights and benefits of the consumers as “owners” are not given to them by NEA. After registration with CDA, the members’ equity may be computed as “share capital” and entitled to receive interest and other benefits from net surplus. The member-consumers should be issued a Certificate of Share Capital specifying thereat the amount of investment.

3. On absence of strong regulatory body. The appeal stated that the electricity program will fail if the electric cooperatives are registered with the Cooperative Development Authority. We say that PD 269 was issued under martial law. In the case of Philreca vs. Dept. of Finance (June 10, 2003) the Supreme Court stated that the control of NEA was necessary because of the loans, mostly foreign funds, which were granted to the cooperatives. It requires control to assure its payment. However, under EPIRA, the remaining unpaid loans have been condoned and assumed by PSALM. Hence, there is no more reason for NEA control. We have sufficient laws and regulations to protect the interests not only of the cooperatives but also of the member-consumers. NEA shall continue to give financial and technical support.

4. Impact on Rates: The appeal stated that under PD 269 electric cooperatives are non-profit. If converted, the power rate will increase because there shall be a return on investment. We say, in actual practice, most electric cooperatives 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 electric cooperatives will be tax-exempt. Obviously, it will result to lower rate. Moreover, the member-consumers are entitled to patronage refund and interest on share capital whenever there is a net surplus.

Now is the time for consumers of the electric cooperatives to get what is due to them. They have investments and they are joint owners. Now is the time for change. — OTHONIEL GONZAGA, President, Electric Cooperatives Consumers for Reform, Inc. (ELCCORE Inc.), Iloilo City