With incessantly rising fuel prices in the world market, the country’s electric cooperatives (ECs) had been ordered to implement cost cutting measures in their operations so as not to create additional burden to consumers.
With incessantly rising fuel prices in the world market, the country’s electric cooperatives had been ordered to implement cost cutting measures in their operations so as not to create additional burden to consumers.
The National Electrification Administration told the ECs to “to re-evaluate their practices on cutting operating expenses, particularly on the use of fuel.” NEA, which exercises oversight power over EC, acknowledged that “the rising fuel costs can put a major strain on the financial operations” of the power utilities. NEA primarily decreed that “should the ECs’ actual disbursement on fuel exceed the budget allocation, there is a need for supplemental and/or budget realignment as stated in the NEA Memorandum No. 2021-46.” The agency thus instructed the board of directors, management and staff of the ECs “to continue practicing the cost-cutting measures in their operations since prudent use of EC funds ensures their financial stability even during critical times.” Key components of the operating costs of the power utilities are often integrated in the calculation of their regulated tariffs, although the Electric Power Industry Reform Act chiefly prescribed that “only prudently-incurred costs” shall be considered in the regulatory approval of pass-on rate to the consumers. Beyond servicing the round-the-clock electricity needs of Filipino end-users, the ECs had also been given the mandate to pursue the electrification of all barangays, sitios as well as households nationwide. That had been a target cast by the Duterte administration from 2016-2022, but due to budgetary constraints, the aim of nationwide electrification had fallen short in the last government leadership. There are no specific pronouncements yet from the newly installed Marcos administration when it comes to target of expanding the energy access of all consumers – especially to those who are living in far-flung areas as well as in domains that have physical hurdles when it comes to connecting them to power grids. In the 2022 national budget, NEA sought P18 billion that shall be funneled to the electrification projects of the ECs, but the final allocation had just been 10-percent or P1.8 billion.
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