Politico Economic Determinants of Electric Cooperatives’ Performance in the Philippines

Abstract

In rural areas, the task of ensuring electricity access and quality of service provision falls largely on the hands of electric cooperatives (ECs). Aside from economic, spatial and EC-specific characteristics of their franchise areas, another challenge to their service delivery is politico-economic in nature. This paper examines the politico-economic determinants of EC performance in the Philippines. The study utilized ordinary least squares (OLS), ordered logit, fractional logit, and beta regression techniques to assess different measures of EC performance (i.e. consumer-employee ratio, performance ratings, system losses, and collection efficiency rate) and how they relate to political variables.

The results show that higher politicization, as measured by an increased share of fat political dynasties (Mendoza et al., 2019), is associated with more bloated staffing for ECs and relatively poor collection efficiency. Moreover, economic and EC-level variables, such as per capita income, gigawatt hour sold, and to an extent, consumers per circuit kilometers of line, are significantly correlated with EC performance. Given these findings, institutional measures to help ECs serve their mandate should be pursued such as upholding the independence of the EC Board of Directors, encouraging participation of member consumers, and protection from other forms of political lobbying. While a number of these measures already exist as enshrined in RA 10531 and under various rules and regulations issued by NEA and other government agencies, the results imply that their actual enforcement and implementation should be more guarded in EC areas with less political competition.

Keywords: electrification, electric cooperatives, political economy, collection efficiency, consumer-employee ratio