How difficult is it to run an electric cooperative or distribution utility (DU) in the Philippines?
If you come to think of it, as long as there are qualified and competent people in charge, it shouldn’t be so hard. After all, the simplified definition of the duty of a DU is that it simply makes sure that the electricity it contracted from power generators that has been delivered through the national grid is sent to the homes/businesses/factories of its consumers and billed properly.
The DU doesn’t produce the power that goes into our homes so it doesn’t own or manage any power plants. It merely accepts the electricity it contracted from power plants, transmitted through transmission lines of the National Grid Corporation of the Philippines. That power is delivered to the DU’s substations, which is where its jurisdiction comes in.
From the substation, the electricity flows through the DU’s electric lines and transformers until it finally goes through the customer’s electric meters and consequently our appliances and devices, which consumes the power. Our electric bills are determined by the meter, which the DU collects so it can also pay its obligations to the power generator, the NGCP, its employees and suppliers.
It’s a pretty straightforward setup, and as long as the substations and power lines are properly managed and maintained, any DU shouldn’t have problems when it comes to delivering the electricity to our homes in the most reliable and cost efficient possible.
It’s a simple business model, if you come to think of it. Buy power at the best possible rate, pay delivery charges to the NGCP, add admin charges for salaries, admin costs, pay back loans for infrastructure and/or fund upgrades, and then sell the power without any profit involved to consumer/members of the cooperative at the best possible rate.
In an ideal world, a NOT-FOR-PROFIT-cooperative such as the way the Central Negros Electric Cooperative is structured right now, would be the best way to set up a DU because there would be no need for management to consider profit margins. However, if it is privatized, profits will naturally be a priority, because that’s what businesses are about. Let’s never forget that businessmen are not charity workers who just want our lives to be better. These worship the almighty god Mammon first and foremost, and whatever profits they expect to make from running a DU, it is ultimately the customers that will provide that margin.
I’m getting sidetracked here, so let us shift the discussion back to how DUs are run. The above-mentioned business model is just the basic outline, and there are certainly additional equipment, upgrades, and measures that can improve and ensure the quality and reliability of the electricity they deliver. How those improvements are planned, financed, and implemented, will depend on the quality of the people in charge of the organization. If they are technically competent and fiscally prudent people who can make sure investing in any upgrades is money well spent and ultimately beneficial for their consumers and bottom line, then the DU should be in good hands. However, if those people are unqualified and incompetent political appointments who got their position out of horse trading or sheer luck, then of course, everything goes to hell sooner or later.
The most important question these days: is our Ceneco properly managed and is it an ailing cooperative?
I’m not sure I can answer those questions, but based only on the quality of their service, and the look of their building on Mabini Street, they certainly do not look particularly well run. There are so many complaints regarding the quality of service, especially their notorious day-long maintenance brownouts, the frequency of unscheduled power interruptions, poor quality of electricity in terms of fluctuating voltage, and yes, their main office looks totally decrepit. Whoever has been running things could certainly do better.
Whether by incompetence or on purpose, Ceneco has attracted this JVA. Because if they had only performed satisfactorily, there would be no reason to bring in private investors. Now that the private investors are promising consumers the moon just so they can dig their claws into a very profitable business that the cooperative has unfortunately failed to run properly, it is starting to become highly unlikely for the Ceneco leadership to make a comeback and say that they are still capable of turning things around. Given their track record, how can they say they can still leverage their non-profit status with a much better management and technical team to strive toward their original goal of providing reliable, quality, and affordable electricity to member-consumers?
Ceneco’s woes would’ve been easy to fix if not for years of mismanagement and neglect that have piled up, making its performance difficult to defend against a JVA that will end with the transformation of the DU from a non-profit to a for-profit one. By now, consumers are so pissed at them that it seems most are willing to give up on the coop as long as they are promised better service, and the possibility of lower rates, that a privately run business group is now offering.
Will Ceneco as a coop still put up a fight? Or have its supposed defenders already given up and are getting ready to sell to the highest bidder?*
