Power cooperative grades to increase weighting of governance, compliance

THE National Electrification Administration (NEA) said its new evaluation system for electric cooperatives (ECs) will feature an increased weighting for compliance and other governance considerations, including financial performance.

In the new system, a maximum of 40 points will be given to ECs deemed to be exemplars of good governance practices, while the top rating will be denied to ECs that fail to meet compliance deliverables despite otherwise favorable scores on the points system.

“We amended the criteria for EC Categorization to establish accountability and responsibility in ECs’ compliance and fiduciary obligations, and to ensure implementation of EC good governance,” Antonio Mariano C. Almeda, NEA administrator, said in a statement.

NEA said the financial components of good governance include healthy debt levels, liquidity, financial results, and audit rating.

The NEA said that financial efficiency will also be determined through the EC’s collection efficiency; payments to power suppliers, to the NEA and to banks and other financial institutions.

The new evaluation weightings were approved by the NEA board of administrators on April 25.

Under the previous rules, NEA gave a 25-point weighting to financial performance. Institutional strengths were graded on a scale of 30 points, technical capacity 20 points, level of electrification 20 points, and compliance with reporting requirements five points.

NEA said the old institutional governance component included 20 points for the performance of the board of directors and general manager, member participation and involvement, action on consumer complaints or requests and the results of a customer satisfaction survey.

NEA said technical performance will be rated on system losses and reliability.

“A demerit of two points shall be imposed against ECs which were not able to conduct a Competitive Selection Process (CSP) as scheduled in the Power Supply Procurement Plan,” NEA said.

A triple A rating indicates that the EC scored 95-100 points; AA 90-94 points; A 85-89 points; B 75-84 points; C 50-74 points; and D 49 points or less.

The new rules require an EC aspiring to the AAA category to meet standards for system losses, reliability, collection efficiency, financial performance, and payment of power suppliers. The EC must also have conducted district elections and organized an annual general membership assembly.

“An EC which fails to comply with any of the herein listed parameters shall only be categorized as “AA” notwithstanding a total score of 95 or above,” NEA said. — Ashley Erika O. Jose