AT FIRST glance, it may seem like a good idea. But a closer look suggests otherwise. This raises a critical question: Why should the government continue funding electric cooperatives when, since their inception in the 1960s as vehicles for rural electrification, many have been plagued with poor service and frequent brownouts?
In 2024, Sen. Grace Poe and various energy experts pointed out that some electric cooperatives lack the technical capacity to support economic growth in developing areas. This is not merely a problem of perception — it’s a structural issue.
While researching the topic, I came across an interesting article published by Energy Central PH on May 9, 2025. It reported that the National Electrification Administration (NEA) has initiated talks with the Asian Development Bank to explore new funding avenues for the capital needs of electric cooperatives (ECs) across the country.
According to NEA, the goal is to modernize sub-transmission systems and improve regional power infrastructure to deliver more reliable and higher-quality electricity to consumers. The vision is clear, but so is the cost.
Although foreign aid helps, NEA — being a state agency — still relies heavily on public funds. These taxpayer-backed resources make transparency and accountability in funding not just desirable, but imperative.
For context, NEA issued approximately ₱1.8 billion in loans to 36 ECs in 2024 — up from ₱1 billion the previous year. Of this, nearly ₱1.2 billion was allocated for capital projects in over 20 provinces. The funding primarily aimed to upgrade outdated infrastructure.
Through NEA’s Enhanced Lending Program, ECs can apply for both regular and short-term loans to support a wide array of projects, including renewable energy initiatives, system upgrades, post-calamity rehabilitation, and even modular generator sets customized to meet operational demands.
However, it’s not all good news. Bienvenido Oplas Jr., president of Minimal Government Thinkers, criticized NEA as a “wasteful agency” that props up inefficient ECs with billions in taxpayer-funded subsidies and loans. Despite receiving ₱12.9 billion in funding since 2020 — plus annual subsidies — many ECs continue to deliver subpar service and suffer financial losses when compared to private utility firms.
Oplas also noted that NEA allows ECs a system loss ceiling of up to 12% — double the 6% limit imposed on private distribution utilities (DUs). This regulatory disparity translates to higher electricity costs for consumers in rural areas, which defeats the very purpose of rural electrification.
Meanwhile, a report by the Institute of Contemporary Economics revealed another disturbing trend: from 2022 to September 2024, electric cooperatives in Panay and Guimaras used only ₱2.38 billion of the ₱10.52 billion allocated for capital expenditures. That’s just 22.6% of planned investments. Worse, only 3.1% to 3.7% of total spending went to infrastructure development. The result? An underdeveloped and vulnerable power grid that fails to keep up with rising demand.
Thankfully, Iloilo City escaped this predicament. Five years ago, MORE Power and Electric Company (a.k.a. MORE Power) took over the city’s distribution system. Since then, Iloilo City has become a shining example of what a productive partnership between a local government and a power utility can achieve in terms of economic progress and quality of life for its residents.
It was also a positive development that Congress granted MORE Power the franchise under Republic Act 11918, allowing it to expand operations to 15 municipalities and one component city in Iloilo Province. Unfortunately, the 1st District, currently served by ILECO I, is not part of the coverage.
On a broader scale, NEA recently admitted that it would not be able to meet its original target of 100% electrification by 2028. The agency cited funding limitations and implementation setbacks, pushing the goal back by at least two to three years.
There is, however, some accountability on the horizon. House Resolution No. 1302, filed in 2023, calls for a review — and potential revocation — of the franchises of underperforming ECs, citing their chronic brownouts and dismal service. It also proposes exploring alternatives, such as creating new cooperatives or adopting other models to improve electricity delivery in underserved areas.
So, we return to the question: Are electric cooperatives becoming obsolete? And are efficient, privately run distribution utilities the future of energy delivery in the Philippines?/PN
