AILING ELECTRIC COOPERATIVE

Under RA 10531, Section 20. Ailing ECs, an EC may be declared as ‘ailing’ when it falls to the

following circumstances:

A) Has negative net worth for the last three (3) years. For this purpose,

“Negative Net Worth” shall mean as the financial condition of an EC in which its

liabilities are greater than its assets;

B) Has accumulated ninety (90) days arrearages in power supply purchases from generating

companies and power suppliers/source of electricity, and the transmission charges by the

Transco or its concessionaire;

C) Unable to provide electric service due to technical and/or financial inefficiencies, and/or

institutional problems;

D) Unable to efficiently perform its electric distribution utility obligations or continue in

business due to organizational, external, and internal factors; when an EC has failed to

meet other operational standards established by the NEA; and

E) Unable to set up or continuously support its Wholesale Electricity Spot Market prudential

requirements.1

Table 1. BARMM Electric Cooperative Performance based on NEA parameters and standards for 2022.
1
National Electrification Administration - 2022 1 st Quarter Compliance Report, p.5
Parameters Standards MAGELCO LASURECO BASELCO SULECO TAWELCO SIASELCO CASELCO
A. Cash General Fund At least one (1) -5 months -8 months -3 months -2 months -4 months +1 month +1 month
month working
capital for power
and non-power
costs

B. Collection Efficiency 95% 45% 20% 65% 88% 85% 100% 95%

C. Accounts Payable –                
Power

  - GENCO's Current/ On Arrears On Arrears On Arrears On Arrears On Arrears Current Current

(NPC/PSALM) Restructured-
Current

  -Transmission (NGCP) Current/ On Arrears On Arrears n/a n/a n/a n/a n/a
Restructured-
Current
                   
D. Accounts Payable -                
Financial Institutions

  - NEA Current/ On Arrears On Arrears On Arrears On Arrears On Arrears Current Current

Restructured-
Current

 
- Banks Current/ On Arrears On Arrears On Arrears On Arrears On Arrears Current Current
Restructured-
Current
                   
E. Result of Financial Positive Negative Negative Negative Negative Negative Positive Positive
Operations

F. Networth Positive Negative Negative Negative Negative Negative Positive Positive

G. System Loss 13% or below 45% 55% 42% 28% 35% 12% 14%

Source: National Electrification Administration (NEA)

According to the data shown above (Table 1), the MAGELCO had a negative 5 months duration

of working capital cost, this implies that they have backlogged with their working capital asset to

the supplier (mostly, by GENCOs), with a collection efficiency rate of 45 percent, which is lower

than the standard collection efficiency of 95 percent. The accounts payable of power of the said

EC remains on arrears to both GENCOs and NGCP, as well as its accounts payable to the NEA

and to the Banks. The result of financial operations and net worth remains negative, which

means that they were unable to pay for their debt on due time. Likewise, in terms of their system
loss, it acquired 45 percent of power losses or energy wasted which is higher than the maximum

allowable system loss limit of 13 percent. This means that MAGELCO have garnered poor

overall performance level. While, LASURECO has negative 8 months duration of working

capital cost for power and non-power assets that are on arrears to the supplier, and a low

collection efficiency rate of 20 percent. Whereas, the accounts payable of LASURECO on both

power and financial institutions remain on arrears, and the financial results for operations and net

worth remains negative. Furthermore, ECs from island provinces like BASELCO, SULECO, and

TAWELCO have acquired an average of negative 3 months duration of working capital cost for

power and non-power resources to the supplier, with an average collection efficiency of 90

percent which is nearly efficient to the standard efficiency rating of 95 percent. Similarly, in

terms of accounts payable to GENCO, NEA and banks were as well on arrears. Along with this,

these three ECs had negative financial operations and net worth, and having an average of 35

percent of system loss. Though SIASELO and CASELCO had positive 1 month, showing that it

has been paid the working capital for power and non-power cost to the supply. Correspondingly,

it had reached the standard collection efficiency of 95 percent and the accounts payable to

GENCO, NPC, and to the banks at current, indicating that it has been paid on time. Moreover,

the system loss is nearly equal to the standard rating of 13 percent, meaning SIASELCO and

CASELCO were able to comply to comply their requirements and to follow standard procedures.

As given on the table, it shows that LASURECO and MAGELCO had the poorest performance

level with the longest duration of arrears of working capital for power and non-power costs,

having a poor collection efficiency rate, and possesses to exceed much higher than the maximum

allowable system loss which might possibly due to non-technical loss or losses caused by

pilferage, defective meters, overloading systems, erratic billing cycles, or dilapidated distribution
system.2 On the other hand, SIASELCO and CASELCO had complied all the arrears on cash

general fund and accounts payable on GENCON, NEA, and Banks as well as having the most

efficient performance level.

INSUFFICIENT POWER SUPPLY LEVEL

The study shows that efficiency of ECs rises with size. This result is robust with respect to how

size is defined. The study finds that, unsurprisingly, levels of inefficiency are inversely related

to system losses. The study also shows that structural and operational characteristics significantly

affect EC efficiency. ECs are likewise found to be inefficient in the non‐technical component of

their distribution costs vis‐à‐is their line operations and maintenance costs.

Keywords: Data envelopment analysis, Malmquist index, Electric cooperatives, Philippines.3

0.5 0.5
CASELCO 0

0.7
0.7
SIASELCO 0

6.5 7
TAWELCO
-0.5
7 9
SULECO
-2
9 11
BASELCO
-2
18 42
LASURECO
-24
6 23
MAGELCO
-17
-30 -20 -10 0 10 20 30 40 50 60 70
a. Contracted Supply b. System Demand c. Deficit/Power Surplus

2
National Electrification Administration - 2022 1 st Quarter Compliance Report, p.23
3
Efficiency Analysis of Electric Cooperatives of the Philippines, by Helena Agnes S. Valderrama and Carlos C. Garcia,
University of the Philippines, College of Business Administration, Diliman, Quezon City, introduction,
https://pmr.upd.edu.ph/index.php/pmr/article/view/302/301, p.1
Figure 1. Power Supply and Demand Level of BARMM Electric Cooperatives. Quantity unit in megawatts (MW).

The figure above shows the level of the power supply available on every Electric Cooperatives

(ECs). According to the data gathered, it consists of contracted supply of the ECs to the

consumers, the system demand needed to lay on all the consumers covered by the ECs, and the

deficit or power surplus or the extra power needed in order to obtain enough supply to the

consumers. As the data shown, CASELCO and SIASELCO has small and equal amount of

contracted supply and system demand of 0.5 megawatts which results of having zero deficit or

power surplus (no deficiency of supply). TAWELCO, SULECO, and BASELCO have an

average contracted supply and system demand of 7.5 and 9 megawatts, respectively. It means

that the system demand is higher than the contracted supply which results of having an average

deficit of 1.5 megawatts needed to obtain enough supply to the consumers. Whereas MAGELCO

and LASURECO have and average supply of 12 megawatts and average system demand of 32.5

megawatts. This means that the demand is much higher than the supply obtained by the ECs

resulting on having a high average deficit of 20.5 megawatts. Therefore, MAGELCO and

LASURECO had the most insufficient power to supply their consumers.

From the graph given, it shows that LASURECO and MAGELCO had the poorest performance

to obtain adequate power supply for their consumers. Whereas SIASELCO and CASELO had

the most sufficient power supply to allocate to the consumers.