President Rodrigo Duterte has issued an executive Order transferring the power to take over ailing electric cooperatives from the National Electrification Administration to the Office of the President.
Under EO No. 156, the President may assume control of what could be considered as an “ailing” electric cooperative based on implementing rules and regulations under Republic Act No. 10531 or the NEA Reform Act of 2013.
“While electrification of the entire country is one of the primary concerns of the government, certain distribution utilities, as well as ailing cooperatives, continue to underperform, and thus hamper government efforts for the country’s total electrification,” Duterte said in the EO.
“The power to exercise step-in rights and take over the operations of ailing electric cooperatives…to improve the financial condition of such electric cooperatives, is hereby transferred to the Office of the President.”
Within 30 days from the issuance of the order, NEA, through the Department of Energy, should report to the President the status of ailing cooperatives.
The DOE was, meanwhile, ordered to identify unviable, unserved, underserved and poorly served areas within the franchise areas of distribution utilities.
He also mandated distribution utilities to submit a Comprehensive Electrification Master Plan (CEMP) that would lead to the “total electrification” of their covered franchise areas.
The DOE has the power to reject or modify the CEMP if “it is not in accordance with the objective of total electrification or if it will not provide the highest quality and least cost of service for providing electricity.”
The Energy Regulatory Commission was also directed to impose fines and penalties against non-compliant distribution utilities and recommend to Congress the revocation of their franchises, as may be warranted.