National Electrification Administration

The Electrification Administration was initially created and established through Republic Act 2717 without Executive approval on June 19, 1960 in order to promote and accelerate the agricultural and industrial development of the Philippines. The agency was headed by an Administrator (appointed by the President with the consent of the COA or Commission of Appointments) for a term of ten (10) years, and two (2) Deputy Administrators.[5]

The agency maintains a revolving fund consisting of ₱5 million appropriated annually starting fiscal year 1961 until 1965, other fund or assets received from or out of Japanese reparations and loans obtained under the same.[6] Out of this fund, the Administration was authorized and empowered to make loans to local governments, electric consumers cooperative associations and Filipino electric franchise holders for the purpose of financing the construction and operation of generating plants, electric transmission and distribution lines or systems for the furnishing of electric energy, particularly in remote areas.

Nine (9) years after the creation of Electrification Administration, a National or State policy of total electrification on an area coverage service basis was declared through Republic Act 6038 approved on July 28, 1969 and signed by then President Ferdinand Marcos, including Presidential Decree No. 40 and Letter of Instruction No. 38, dated November 7, 1972 effectively repealing Republic Act 2717.[7]

The Board of Administrators were introduced in the agency, which shall be composed of a Chairman and four (4) members, one of whom shall be the Administrator as Ex-officio Member of the Board and Chief Executive Officer (CEO) of NEA. General Pedro Gallarza Diaz Dumol became the Administrator after being offered the post by then Executive Secretary Alejandro Melchor.

Chapter III of this law also called for the organization, promotion and development of cooperative non-stock, non-profit membership corporations and electric cooperative corporations (ECs) formed or registered under Republic Act 2023 or the Non-Agricultural Co-operative Act for the distribution of power in the countryside.

Additional appropriations to the revolving fund consisted of ₱20 million (but not limited as to the amount Congress may further appropriate) annually starting fiscal year 1970 until 1979, proceeds to the share of the National Government in all franchise taxes paid by electric service entities, and continuing funds or physical assets received from or out of Japanese reparations.

On August 6, 1973, the National Electrification Administration through Presidential Decree No. 269 was converted into a corporation, wholly owned and controlled by the Philippine government under the supervision of the Office of the President. Possessed with borrowing authority and corporate powers, the authorized capital stock of NEA was pegged at ₱1 billion divided into ten (10) million shares having a par value of one hundred (₱100) pesos each. Six (6) years later, Presidential Decree No. 1645 increased the authorized capital stock by ₱4 billion with an additional forty (40) million shares.[8]

Sections 42 and 43, Chapter IV of the NEA decree effectively repealed the power to grant "electric system" franchises from the Municipal, City and Provincial Governments in favor of the NEA. As such, the corporation will also receive from Electric Cooperatives (ECs) all articles of incorporation, amendments, consolidation, merger, conversion and dissolution, and all certificates of changes in the location of principal offices and of elections to dissolve.

The composition of the Board of Administrators (BOA) was retained, composed of a Chairman and four (4) members appointed by the President, one of whom shall be the Administrator as Ex-officio Member of the Board with a term of six (6) years. The BOA shall administer, acting as a Commission, all the provisions found on Chapter IV of the NEA decree.

Republic Act 9136 or the “Electric Power Industry Reform Act of 2001” (EPIRA) effectively condoned all outstanding financial obligations of Electric Cooperatives (ECs) to NEA and other government agencies (incurred for the purpose of financing the Rural Electrification program [REP]) and was assumed by the Power Sector Assets and Liabilities Management Corporation (PSALM).[9]

Then President Gloria Macapagal Arroyo also issued Executive Order 119 ordering the reorganization of NEA to bring down the power rates considerably. The reorganization was approved and implemented by the Department of Energy (DOE) and Department of Budget and Management (DBM).

The enactment of Republic Act 6939 creating the Cooperative Development Authority (CDA) as amended by Republic Act 9520 or the Philippine Cooperative Code of 2008 may have allowed Electric Cooperatives (ECs) to qualify for certain tax exemptions or pay lower taxes[10] but also raised questions on NEA's jurisdiction over ECs.

Arguments raised as follows: 1) The ECs don't have autonomy and independence and democratic control of member-consumers because NEA appoints the General Manager who may ignore policy decisions of the General Assembly-elected members of the Board of Directors.[11] 2) The transfer of all outstanding obligations of ECs from NEA to PSALM through the EPIRA law extinguished the basis of the regulatory and supervisory powers of NEA, i.e. loans previously extended.[12]

When Republic Act 10531 was enacted on February 4, 2013, it declared a threefold National or State policy: First, to empower and strengthen the NEA; Second, to empower and enable Electric Cooperatives (ECs) to cope with the changes brought about by the EPIRA law; and Third, to promote the sustainable development in the rural areas through rural electrification.[12]

This law may as well be considered as curative statute that is intended to address the impact of a restructured electric power industry under the EPIRA on Electric Cooperatives (ECs), which has not been fully addressed by the Philippine Cooperative Code of 2008.

In some June 2017 newspaper articles, Administrator Masongsong was quoted as saying there's a move to amend the NEA Charter to allow it to regulate Electric Cooperatives (ECs) aside from monitoring and supervision, to be unofficially named National Electrification Authority. The policy change seeks to allow NEA to propose policies and legislation to improve the power industry and expand the NEA's mandate to cover other electricity distribution utilities like private investors owned utilities and private distribution utilities.[13][14]