The Philippine Competition Commission (PCC) on Wednesday said it is working with the National Electrification Administration (NEA) to study reforms in the ownership framework of electric cooperatives (ECs) to level the playing field.
The NEA is a government-owned and controlled corporation which supervises 121 ECs nationwide.
Last week, the PCC and NEA held a strategic policy dialogue (SPD) to discuss the findings and recommendations of the PCC’s Economics Office (EO) on measures to improve the ownership structure of ECs.
With legislative franchises of ECs due to expire in the next five years, the PCC wants a mechanism that would promote fair competition in electricity distribution.
The agency stressed the importance of well-designed competitive selection processes. It made the following recommendations:
— Maintaining a large pool of bidders for certain geographical areas by encouraging both incumbent and future distribution utilities to participate;
— Competitive selection process designs should consider possible vertical affiliations of ECs with power generation companies, as well as the ability of prospective players to serve stranded or underserved communities;
“Reforms in the sector must account for the varied conditions of electric cooperatives, particularly those which operate in underserved and high-cost areas,” the PCC and NEA noted.
NEA defined its role as a financial, technical, and quasi-judicial entity that provides tailor-fitted interventions for underperforming electric cooperatives, ranging from technical support to governance reforms and the deployment of a task force to oversee board functions.
It also affirmed its commitment to refer any observed anti-competitive behavior to the PCC.
Another focus of the dialogue was the legal safeguard under Presidential Decree 269, which requires the approval of 50 percent plus one of the total member-consumers for any major asset transfer or ownership change.
“This stringent threshold ensures that privatization cannot proceed without the explicit approval of the cooperative’s majority, thereby protecting consumers against franchise creep and the potential stranding of remote areas,” the PCC said.
As part of its broader mission to implement the National Competition Policy, the PCC conducts market studies to guide government agencies in adopting pro-competitive policies.