By Myrna M. Velasco
Published: August 10, 2013
Petilla
That seems to be the mantra of Energy Secretary Carlos Jericho L. Petilla when it comes to enforcing fiscal discipline to the country’s ailing electric cooperatives.
Alas, there’s no third choice. And the energy chief, by any measure, meant serious business as we have just seen recently the power supply disconnection of one debt-laden power utility – the Albay Electric Cooperative or ALECO.
Mr. Petilla sets out a very forthright policy statement that if the liability-ridden ECs or other distribution utilities will not be prompt and prudent in settling their outstanding obligations and accumulated debts, he will not prevent any electricity service cut-off that may be requested or demanded by power suppliers.
He stressed that roughly 5.0-percent of the country’s electric cooperatives are indebted to the power generators/service providers and have been experiencing some degrees of difficulty when it comes to paying their dues without delays.
While he is not necessarily wishing for it, Mr. Petilla said various customers nationwide served by these ECs could suffer brownouts – if their servicing ECs or power utilities cannot settle obligations as they fall due.
“The (Department of Energy) emphasizes that non-payment of current accounts may still result in power disconnections,” the energy chief averred.
Alphabet Soup Of ‘Delinquent’ Ecs
ABRECO, ALECO, LASURECO or even PAMES are not just plain alphabet soup of ECs or power utilities. At times, they hog the headlines because they have consumers becoming collateral damage to power interruptions because of either ‘inefficiencies’ or mismanagement in their operations.
By now, ALECO’s story is well known. And the other ECs -- Abra Electric Cooperative (ABRECO), Lanao del Sur Electric Cooperative (LASURECO) and Pantabangan Municipal Electric Service (PAMES) had also been threatened with or had actually experienced power supply disconnections. The list doesn’t stop there – it gets longer as the government and the entire power industry keep a closer watch on the debts’ settlement of Olongapo’s electric power utility; as well as the accruing debts of other ECs in Luzon, Visayas and Mindanao – such as those in Isabela, Camarines Sur, Samar and Maguindanao, among others.
LASURECO woefully has the biggest arrears of more than R6.0 billion, but its general manager, Sultan Ashary Maongco, presented measures on how he intends to resuscitate the EC – both on the technical sphere of its operations as well as financially.
Beyond the technical improvements he has been pushing for, the EC official vouched on the 400-percent increase in the EC’s collection efficiency. Sounds an impressive feat? Uhm, not exactly! That collection efficiency level was still at a lowly 24-percent, albeit relatively, that was already a striking achievement from a wretched 8.0-percent collection level in recent years.
While one of the pending solutions lodged with the Energy Regulatory Commission (ERC) was a bid for special rate discount which also factors in payment charges to its debts with state-run Power Sector Assets and Liabilities Management Corporation (PSALM), Mr. Maongco enthused that the problem of LASURECO is too deep-rooted that there’s a need to “go back to the basics” just to re-condition Lanaoans’ psyche that electricity is a service which comes with corresponding costs – and not a commodity freely given just because the water source of Agus plant in Mindanao grid straddles their communities.
According to Mr. Petilla, the power utility which comes second when it comes to ‘bad debt’ is Olongapo with R4.8 billion arrears. Then ALECO followed with R1.0 billion accrued liabilities –and being demanded for immediate settlement by some 45 power generator/supplier-claimants mostly affiliated with the Philippine Independent Power Producers Association Inc.
ALECO had its power supply reconnected one day after, but it was imposed with a condition that it must continually cut off from its network its top 100 delinquent subscribers.
In a correspondence earlier sent to this journalist, the National Association of General Managers of Electric Cooperatives Inc. (NAGMEC) admitted that 21 ECs “are deemed laggards in terms of financial comeuppance”; yet the group qualified that some of the overdue accounts attributed to them “are still to be contested.” It expounded that the dues of the ECs have been categorized as: current, restructured, overdue or disputed obligations; as well as value added taxes.
NAGMEC, which is apparently playing the “Big Brother” act to the country’s roughly 120 ECs similarly bewailed “the picture being painted against ECs”, noting that such is a counter-productive track to the national electrification program being pushed aggressively by the national government.
Politics: Off Your Hands
On the backdrop of all these developments, Mr. Petilla indicated that “sensitive toes of politics” had been one of the major culprits which emboldened some ECs to pile up on debts with reckless abandon.
He said some politicians would normally intervene every time a supply disconnection is scheduled at a liability-stricken electric cooperative. That he qualified must stop and politics must start learning to keep its hands off the affairs of power utilities. There is logic to this – because the domino effect of the financial delinquency of the ECs may eventually spread to other service providers and may even trigger bankruptcies of power generators – one thing the country cannot afford to happen because any fresh round of power crisis will bring us back to the ‘sick man of Asia’ status.
No arm-twisting there, but the energy chief’s “offer of compromise” is for politicians “to come to the table with specific proposal on how they can help settle the debts of the ECs servicing electricity requirements in their respective localities.” Absent that, Mr. Petilla who himself was a former governor of Leyte, noted that power disconnections (with brownouts as consequence) will prevail.
But going against the tide of political maneuvers, Mr. Petilla enthused, proves to be a difficult task. “I’m already losing some (or a lot of) hair because of this job,” he complained in jest. Oh by the way, it comes with the territory – if energy secretaries can’t take the heat, they know what to do -- the door is wide open.
And note also that this is a not a simple case of ‘color me life with the chaos of trouble thingamajig’ -- given the fact that the EC problems being reported in media are still wildly understated. Reckoned from that, Mr. Petilla may really be in for a “heavy lifting.”
To his credit though, this energy secretary dared to do something that hasn’t been aggressively touched by his predecessors for fear of political reprisal. And for that, he could etch a legacy for keeping the deregulated power sector afloat – and for those who are not exactly pleased with what he has been instituting as a policy, he might still earn “grudging respect” for doing the right thing.
No Paying Thy Neighbor’s Debt
PSALM president Emmanuel R. Ledesma Jr. apprised media that the debts of the ECs already swelled to R20.06 billion as of end-May; while private distribution utilities are also indebted to the government-run power company with R6.668 billion.
There’s a lurking danger here. What Mr. Ledesma failed to emphasize are the actions being taken by his company to collect such humungous amount from the ECs indebted to it.
The fearful scenario is for PSALM to just let these debts continue to accumulate – and by some stroke of creative accounting, it may just opt to pass these liabilities again as part of its application for a new batch of universal charges.
Under the UC pass-on scheme, all consumers will be paying for these liabilities even if they are not the ones who consumed such unpaid power supply – or a circumstance where we are being unilaterally required to “pay the debts incurred by others.” Or if the government will eventually decide to absorb those debts, they may still add up as our tax burdens. Either way, the impact will cut deep in our pockets. source
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