NEA backs indefinite extension to settle EC power bills amid COVID-19 crisis

By Manila Standard Business – April 08, 2020 at 03:35 pm

The National Electrification Administration (NEA) endorsed the appeal of electric cooperatives (ECs) to extend the deadline of their payment of dues and remittances to power generation and transmission companies indefinitely, or until the state of their business operations normalizes.

NEA Administrator Edgardo Masongsong sought the favorable action of state regulating agencies on this request in a recent official correspondence with the Department of Energy (DOE) and the Energy Regulatory Commission (ERC).

This developed as the collection efficiency of ECs drops sharply amid the ongoing coronavirus crisis, which, in turn, affects their financial ability to settle their accounts with their power suppliers, transmission companies and other firms.

The situation is further complicated by the latest announcement of Malacañang to extend the enhanced community quarantine (ECQ) in Luzon by April 30, prompting the NEA to exert its full support on the ECs’ urgent appeal.

In his letter, Masongsong asked both DOE Secretary Alfonso Cusi and ERC Chairperson Agnes Devanadera for the payment period to be extended “not just for 30 days after April 14, 2020, but until such time that the operations of the ECs have normalized and stabilized.”

To recall, the ERC issued an advisory on March 26 extending for 30 days, without interest and penalties, the payment of all fees due from March 15 to April 14 from the distribution utilities, including the 121 ECs, to the generation companies in light of the COVID-19 pandemic.

The NEA chief, however, explained most of the ECs have already settled their monthly power billings due from March 15 to April 14, as power co-ops usually pay their dues ahead of schedule to avail of the early payment discount.

Masongsong said the power co-ops utilized their collections from February 26 to March 24 to settle their bills during the first cycle, and the concern of the ECs now is the billing period from February 26 to March 25, which is due on April 25.

“The ECs will have difficulty in settling power bills covering this cycle due to limited collection from March 15 to April 14,” he said, citing the 30-day extension granted as well to electricity consumers with bills due the same period in deference to the strict ECQ measures.

Based on latest NEA monitoring, there are over 90 ECs in Luzon, Visayas and Mindanao that provided 30-day grace period for consumers to settle their electricity bills, on top of the cancellation of surcharges and power disconnections for those who failed to pay on time.

Masongsong noted that the ECs now mostly rely on residential consumers, as the extensive quarantines imposed across Luzon and other parts of the country prompted the closure of big establishments, resulting to a significant reduction of power demand.

The NEA also recommended the approval of the ECs’ other request, which is “to invoke the ‘force majeure event’” provision in their power supply agreements, as they cannot fully utilize the contracted capacity rate 100 percent during the crisis period.

“With this billing adjustment, the surge in the generation cost component, which will be passed on to consumers will be mitigated,” Masongsong said, acknowledging the fact that the power co-ops’ appeals will be beneficial for the electricity consumers as well.

On the other hand, the NEA chief urged all ECs to still remit a proportional amount collected from electricity users that are payable to their power suppliers, the National Grid Corporation of the Philippines, Power Sector Assets & Liabilities Management, and the Independent Electricity Market Operator of the Philippines.

Masongsong said this is “to ease the burden [on] our industry players, as we fully understand that the generation and transmission sectors cannot be isolated from the economic consequences of this pandemic.”

In a related development, the NEA administrator said the ECs are also looking into the possibility of subsidizing the electricity needs of poor families whose primary sources of income and livelihoods have been severely disrupted by the coronavirus crisis.

“The ECs are exploring all means to continuously deliver electricity services to their respective consumers, as well as mitigate the cost of electric consumption by accessing funds for the possible implementation of ‘Pantawid Liwanag,’” Masongsong said.

The ‘Pantawid Liwanag’ program is a corporate social responsibility led by the Philippine Rural Electric Cooperatives Association, Inc. (PHILRECA) in support of organized efforts to curb the drastic socioeconomic impact of the COVID-19 pandemic on the poorest of the poor.