Viewpoint: LIGHT ON THE DARKNESS OF CORRUPTION OF ELECTRIC COOPERATIVES IN MINDANAO

In the same period when the miscreant ECs entered into power supply contracts with the FDC coal power plant, two other coal power plants, the 405-MW coal power plant of GNP in Kauswagan, Lanao del Norte and the 300-MW coal power plant of San Miguel (SMCPC) in Malita, Davao del Sur were also offering long-term power supply contracts at prices of around 4.00 pesos/kWh and 4.20 pesos/kWh, respectively. Thus, the deviant ECs would be defrauding their member-consumer-owners (MCOs) in the amount of at least 1.20 pesos per kWh of power supply from the FDC coal plant, and enabling the FDC Misamis Power Corp to earn exorbitant profits in the same amount per kWh. The estimated additional profits of FDC-MPC from the anomalous contracts would have been at least ninety (90) billion pesos over the 25 years of commercial operation of the coal plant.

Upon learning about the anomalous power supply contracts, the Mindanao Coalition of Power Consumers (MCPC) carried out a campaign, from 2014 to 2016, to stop the exploitation of consumers by the electric cooperatives in connivance with the FDC-MPC coal plant. We first implored the officers of the corrupted ECs to renegotiate the contracts, and then sent petitions to government agencies in the power sector (DOE, ERC, and NEA) and to some local government officials to investigate the illegal power supply contracts. Only one electric cooperative (SOCOTECO II) had the anomalous power supply rescinded, while the other fifteen did not do anything to stop the defrauding of their own MCOs. None of the government regulatory agencies and none of the LGUs acted on the complaints submitted to them by consumer groups.

In the year 2017, with all administrative remedies exhausted, the MCPC started campaigning among consumer groups of the corrupted ECs to file petitions at the regional trial courts against the anomalous power supply contracts. A group of MCOs of the Bukidnon Second Electric Cooperative (BUSECO), mostly based in Malaybalay City, were the first to volunteer to file suit at the RTC against their EC officials. The BUSECO consumer group scheduled the filing of the petition for July 2017.

Unknown to most of us in the Mindanao power sector, Edgardo R. Masongsong, after his appointment as the Administrator of the National Electrification Administration, convinced the NEA Board of Administrators to act on a complaint against the BUSECO General Manager on the anomalous power supply contract with FDC Misamis. The complaint was submitted to the NEA in 2015 by E.R. Masongsong himself in behalf of MCOs of BUSECO, when he was congressman of the 1-CARE party list. But the NEA Administrator at that time did not act on the complaint.

In June 2017, the NEA issued a “Notice of Decision” on the complaint against Deiter Arellano, OIC-GM of BUSECO; and in the first week of July 2017, the NEA ordered the removal from office of OIC-GM Arellano, finding him guilty of “grave misconduct, dishonesty and conduct prejudicial to the best interest of the electric cooperative and its member-consumer-owners” in connection with the anomalous power supply contract with FDC Misamis coal power plant. In addition to being dismissed as OIC-GM, Arellano was penalized with: (a) perpetual disqualification from employment by any electric cooperative; (b) perpetual disqualification membership in the Board of Directors of any electric cooperative; and (c) forfeiture of all retirement benefits.

The basic finding of the NEA concerning the anomalous power supply contract was that OIC-GM Arellano concealed from his Board of Directors the fact that there were other power suppliers who were offering long-term power supply contracts at prices that were lower than the price of 5.40 pesos per kWh that was contracted with the FDC-MPC coal power plant. This resulted in the Board approving the power supply contract, thereby forcing their MCOs to pay higher rates for their power supply.

The NEA also found that OIC-GM Arellano did not invite other power suppliers to submit proposals to supply the long-term power supply requirement of BUSECO that was eventually contracted with FDC Misamis. In other words, BUSECO did not carry out the least-cost acquisition process that is required by the EPIRA. It is for this criminal offence that the consumer groups were set to file (and may yet file) petitions in the RTCs against their EC officials.

The decision of the NEA Board of Administrators in the BUSECO case has opened the way to finally getting justice for the consumers of the 15 electric cooperatives whose officials have been defrauding their own MCOs, and enriching the FDC Misamis in the amount of ninety (90) billion pesos in 25 years, through an anomalous power supply contract.

The MCPC will continue to work with consumer groups of the fifteen electric cooperatives in Mindanao in order to:

1. Get the regional trial courts or any competent regulatory agency in the electric power sector to nullify the anomalous power supply contracts of the electric cooperatives with the FDC Misamis coal power plant, and to refund to consumers all amounts that have been paid by the consumers for consumption of electricity under the anomalous power supply contracts.

2. File complaints with the NEA, or with RTCs, against the general managers, the members of the Board of Directors, and all employees of the corrupted ECs who were involved in the conspiracy to defraud their MCOs through the anomalous power supply contracts.

The MCPC people hereby express our gratitude to NEA Administrator Edgardo R. Masongsong for persisting in the campaign to stop the exploitation of member-consumer-owners of the electric cooperatives. We will carry through with the campaign to activate MCOs in the other electric cooperatives in order to terminate the corruption in the fifteen electric cooperatives in Mindanao.