FOR IMMEDIATE RELEASE 04 February 2021 Prolonged no disconnection policy will disrupt cash flow not just within the power supply chain – PHILRECA
Amidst calls to indefinitely extend the no disconnection policy by electric distribution utilities, PHILRECA President and Party-List Representative Presley C. De Jesus said in a statement to media that any prolonged extension of this policy will disrupt cash flow in power supply chain.
“There will be a huge implication in the financial stability of all stakeholders in the energy supply chain should a prolonged no disconnection policy is imposed by the government. And this disruption – bear in mind – is not just going to affect the energy sector. If electricity consumers default on their utility bills payments, then, the distribution utilities will eventually default as well to its power suppliers,” De Jesus explained. Distribution utilities are “mere collection agents” of generation companies and even by the government in terms of taxes. Clarifying that he is not painting a breakdown in the entire economy, De Jesus emphasized that the disruption extends even outside the power sector. He added that “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.”
Recently, some lawmakers and interest groups call for distribution utilities to extend grace period on utility payments as well as the no disconnection of electric service that they implemented last year due to the pandemic. In the case of electric cooperatives who are non-profit electric distribution utilities by nature, PHILRECA claims that they are not the same other utilities who have huge financial capital to support their operations in circumstances like this [pandemic]. “We have seen our economy opening up again to more commercial and economic activities, people are returning to work, and businesses have catch up and adjusted to the new normal. Electric cooperatives have stretch whatever resources they have since the onset of the pandemic.
If you can remember, we even came up with the Pantawid Liwanag Program to at least cover a month or so worth of electric bills of our customers. We’ve done this even before the government has implemented a series of mortarium in utility bills payment nationwide,” De Jesus added. PHIRECA’s corporate social responsibility program, dubbed as the Pantawid Liwanag Program, was implemented during the early months of nationwide lockdown to support the welfare of consumers amidst the pandemic. An estimated amount of Php 418,062,766.00 was allocated by the 121 electric cooperatives to shoulder the bills of some 3,350,225 electricity consumers. Atty. Janeene Depay-Colingan, Executive Director and General Manager of PHILRECA, said that all electric cooperatives have actually been trying to extend all help and assistance that it can to their customers for the last few months of the pandemic. But not all electric cooperatives can withstand months of no cashflow as they are actually non-profit utilities.
“We have implemented no disconnection policies, extended grace periods in payment due dates, and assisted our member-consumer-owners in our own way even if we have limited sources of revenue because this is the nature of electric cooperatives – to serve our MCOs no matter what,” Atty. Colingan explained. “But some of our members cannot afford more months of restricted income. We do not to see an end result where ECs would have very limited funds to support its operations in the first place as a result of no disconnection plan because this is even a worse scenario,” she added. In an advisory of the organization to its members, they advised their member-ECs to decide – on a case-to-case basis – whether to apply and extend their no disconnection policy to its service areas. In a statement, they are enjoining “electric cooperatives to exercise prudence on how they would address non-payment or arrears of their member-consumer-owners.”
The organization clarified that it is not against any extension of no disconnection policy but instead, they will be categorizing the consumers who can avail of such a policy. “Lifeline consumers can be given extension of payment with option for installment payments together with other qualified consumers but it should not apply to all consumers especially those with considerable consumptions and months of accumulated arrearages. This way we can balance the welfare of the consumers and the electric cooperatives,” Atty. Colingan further explained their proposal.
Both De Jesus and Colingan explained that that they are speaking in the perspective of non-profit electric cooperatives who are serving more than 14 million member-consumer-owners nationwide. The other private distribution utilities, they said, may have a different scenario.