Complicating the Epira

WHAT is going on? Didn’t Executive Order No. 460 issued as far back as 2005 say, in effect, that the national Electrification Administration (NEA) no longer counts and is as good as extinct? This is what EO 460 says:

“Pursuant to Section 60 of EPIRA, PSALM shall assume all Rural Electrification Loans upon the effectivity thereof. The assumption of the Rural Electrification Loans by PSALM shall retroact from the effectivity of the EPIRA.

“Thereafter, PSALM and NEA or other creditor government agencies shall enter into contracts and/or agreements, necessary and proper, to undertake the payment of the assumed Rural Electrification Loans through an amortization schedule to be agreed upon between PSALM on the one hand, the NEA or other creditor government agencies, on the other. Where necessary, such contracts and/or agreements may include mutual stipulations on the modification and/or amendments of existing contract of mortgage and other security between ECs and NEA other creditor government agencies.”

The particular section in RA 9136, the Epira Law, says: “Sec.60. Debts of Electric Cooperatives.

Upon the effectivity of this Act, all outstanding financial obligations of electric cooperatives to NEA and other government agencies incurred for the purpose of financing the rural electrification program shall be assumed by the PSALM Corporation in accordance with the program approved by the President of the Philippines within one (1) year from the effectivity of this Act which shall be implemented and completed within three (3) years from the effectivity of this Act, The ERC shall ensure a reduction in the rates of electric cooperatives commensurate with the resulting savings due to the removal of the amortization payments of their loans. Within five (5) years from the con donation of the debt, any electric cooperative shall transfer ownership or control of its assets, franchise or operations shall repay PSALM Corp. the total debts including accrued interest thereon.”

It is clear that the NEA has been legislated out of the picture. So, if that is the case, why is the NEA still interfering with the operations of the 60,000 member Zambales II Electric Cooperative Inc. (ZAMECO II)

ZAMECO II’s board of directors complains of the attempted forced takeover by the NEA of the electric cooperative. This happened when ZAMECO II decided to register itself with the Cooperative Development Authority (CDA).

According to Jose Dominguez, president of ZAMECO I, the SC itself has ruled that electric cooperatives registered with the CDA fall under the coverage of CDA law.

Yet, the NEA openly opposes the transfer to the CDA of the reminding more than 100 electric cooperatives in the country probably because the transfer would make NEA moribund and a useless government agency. It makes sense for electric coops to transfer to the CDA. Not only do the cooperative members begin to realize and actually feel that they are the true owners of their coops, there are also tax savings to be had by joining the CDA. These savings bring down the power rates of the coops.

When the Electric Power Industry Reform Act (EPIRA) became law in 2001, the NEA lost its jurisdiction over the country’s electric cooperatives since the loans granted to cooperatives the basis for NEA’s jurisdiction had been condoned and passed on to the PSALM.

Dominguez says that the resolutions issued by the NEA that became the bases for the takeover of ZAMECO II by a NEA appointed interim board of directors “are void not only because they were issued in grave abuse of discretion, but also since the EPIRA had divested the NEA of such power.”

“The EPIRA provides that the loans extended by the NEA to electric cooperatives (declared by the SC as the reason for NEA’s power to supervise and control electric cooperatives in a case brought by the Philippine Rural Electric Cooperatives Association) have been condoned,” he said.

He stressed that the lawful board of directors of ZAMECO II has been ably managing the affairs of the cooperative “such that the NEA itself categorized the ZAMECOII as ‘Category A plus.”’

Another plus for an electric coop registering with the CDA is the provision of the CDA law that “the State shall, except as provided in this Act, maintain the policy on non-interference in the management and operation of cooperatives.”

This was the state of things when last Oct.29 several municipal mayors, aided by government employees and barangay officials, stormed the cooperative’s head office, forced out the legitimate members of the board, and, with the aid of the NEA, set up a new board and appoint a new general manager.

What is happening with the Epira? Has this law, like everything else, only made matters worse in our power sector by becoming another bone of contention among the various players? Wasn’t the Epira supposed to make the power sector operate more simply? Wasn’t the Epira supposed to lower power rates? Wasn’t the Epira supposed to solve whatever problems the power sector was having?

Why does it seem that the existence of the existence of the Epira Law only complicates matters?

By. Ducky Paredes – Malaya