Prolonged ‘no disconnection policy’ alarms electric coops

By Myrna M. Velasco – February 4, 2021, 3:10 PM
from Manila Bulletin

The country’s electric cooperatives (ECs) have raised alarm of highly probable ‘cash flow disruption’ from overly extended ‘no disconnection policy’, as being pushed by some government leaders and interest groups.

And if the power utilities’ stream of revenues will be severely restrained, this in time will bear extreme repercussions for the industry — including poor service or even brownouts if the ECs can’t have their hands on cash that they badly need for service improvements and expansion projects.

Party-list Representative Presley C. De Jesus, who is also the president of the Philippine Rural Electric Cooperatives Association Inc. (PHILRECA), indicated that “any prolonged extension of this policy (no disconnection) will disrupt cash flow in the power supply chain.”

When that happens, he noted that “there will be huge implication in the financial stability of all stakeholders in the energy supply chain.”

The aggrupation of the electric cooperatives has been responding to earlier calls put forward by some lawmakers and advocacy groups, seeking that the no-disconnection policy on unpaid electricity bills be stretched further. That should have lapsed end-December last year; but there have been DUs that already extended it to January 31, 2021.

De Jesus expounded “if electricity consumers default on their utility bill payments, then, the distribution utilities will eventually default as well to its power suppliers.”

And the domino effect, according to him, will not just be within the confines of the power industry, but also with financial institutions because the ECs and other distribution utilities (DUs) have financial obligations to settle with their lenders.

“Power suppliers also have their own obligations and payments due to banks and other financial institutions. So, DUs’ possible default or non-payment will eventually affect power suppliers’ obligations to banks and financial institutions as well,” De Jesus explained.

The PHILRECA president specified the DUs “are mere collection agents” of generation companies, and even by the government for the tax components being passed on in the electric bills – such as value added tax (VAT) and other levies enforced by policies.

Primarily in the case of the ECs, De Jesus emphasized that their financial leeway is not as massive as their private sector-counterparts because the nature of their operations is anchored on a ‘non-profit’ venture.