Power Struggles: How Inefficient Electric Cooperatives Held Back the PH in 2025

January 30, 2026

Electricity powers modern life, from homes and hospitals to factories and farming. Yet in the Philippines, particularly in the rural heartlands, power supply remains uneven, unreliable, and increasingly costly.

Across the archipelago, electric cooperatives (ECs), which are community-based utilities designed to serve member-consumer owners, have been under scrutiny for decades, and 2025 was no exception. Over the past year, ECs were flagged for chronic inefficiencies, financial instability, and poor service delivery. These problems have sparked consumer complaints, government interventions, legislative debates, and even legal actions, revealing a sector under mounting pressure.

(Also read: Top Energy Conglomerates Join Race for Meralco’s 200 MW Clean Power Contract)

Origins of Rural Electrification in the PH

ECs trace their roots to the government’s response to the widespread lack of electricity outside major cities. Before the late 1960s, power service was concentrated in urban areas under private utilities, leaving rural communities underserved.

In 1969, the Philippine government passed Republic Act No. 6038, declaring total electrification of the country as national policy and establishing the National Electrification Administration (NEA) to lead this effort. The law required the organization, promotion, and development of ECs to bring electricity to rural areas on an area-coverage basis.

ECs were set up as non-stock, non-profit, member-based utilities. Under the NEA’s oversight, ECs were empowered to acquire, construct, operate, and maintain electricity distribution facilities within their franchise areas. They were also authorized to borrow funds and secure franchises to operate as legitimate electricity providers.

The Electric Power Industry Reform Act (EPIRA) of 2001 restructured the power sector and changed how cooperatives operate within a more competitive and deregulated market. Although the NEA continued to supervise ECs, regulatory oversight of tariffs and market operations shifted to the Energy Regulatory Commission (ERC) to encourage efficiency and competitiveness.

In addition to NEA oversight, ECs formed the Philippine Rural Electric Cooperatives Association (PHILRECA) in 1979 to represent EC interests, assist with policy development, capacity building, and advocacy, and strengthen cooperation among member cooperatives.

Electric Cooperatives Under the Spotlight in 2025

Ahead, this section looks at electric cooperatives that made headlines in 2025 for operational and governance issues, highlighting ongoing challenges in the power sector.

Ilocos Norte Electric Cooperative (INEC): Alleged Embezzlement and Official Irregularities

INEC became one of the most closely watched ECs due to serious allegations of financial misconduct and internal irregularities. NEA filed criminal complaints against current and former INEC officials after an internal investigation uncovered potential misuse of cooperative funds.

According to NEA and Department of Justice (DOJ) filings, the complaint centers on syndicated estafa involving roughly ₱118 million from the cooperative’s Employees’ Retirement Fund. The charges, lodged in May 2025, accused six current and former executives of INEC, including general managers and department heads.

The agency also noted that additional cases could emerge as the NEA, DOJ, and National Bureau of Investigation (NBI) continue investigating irregularities in multiple ECs, highlighting ongoing concerns about accountability, compliance, and reliability in parts of the rural power sector.

Beyond the legal actions, INEC also faced operational challenges throughout the year.

During Typhoon Nando, which battered the country’s northern provinces in September 2025, a total of 677 families in Ilocos Norte were affected.

Many parts of the province remained without electricity as power restoration continued. The Ilocos Norte Electric Cooperative (INEC) reported that the Northwind 69-kilovolt (kV) line tripped, cutting power in Pagudpud, Bangui, Burgos, Adams, Dumalneg, Pasuquin, and parts of Bacarra. Additional outages were caused by toppled electric posts and trees uprooted by strong winds.

By contrast, the Meralco franchise area experienced no interruptions, suggesting that ECs in the region are less equipped than private utilities to handle extreme weather events.

Albay Electric Cooperative (ALECO): Debt and Reliability Issues

As of June 30, 2025, ALECO faced mounting financial pressures, with arrears in the Wholesale Electricity Spot Market (WESM) exceeding ₱656 million and total liabilities reaching nearly ₱9.9 billion. These figures reflect long-standing issues that have hampered the cooperative for years, including high system losses, poor performance, and operational inefficiencies.

System losses, both technical and non-technical, remain elevated. In April 2025, ALECO reported losses of 23.45%, well above the regulatory caps for distribution utilities, driven in part by pilferage. Its performance rating in the Bicol region has consistently lagged behind peers, with the cooperative classified as “ailing” for eight consecutive years, according to NEA’s public records since 2016.

Past attempts at privatization also failed to resolve these challenges. In 2013, San Miguel Corporation’s subsidiary, Albay Power and Energy Corporation (APEC), took over operations under a 35-year concession, pledging at least ₱250 million to settle debts and upgrade infrastructure. However, billing delays, low collection rates, labor unrest, and incomplete records persisted. By 2022, NEA revoked the concession and resumed supervision, citing APEC’s failure to meet financial and operational targets.

Operational issues remain pronounced. ALECO recorded the highest System Average Interruption Frequency Index (SAIFI) in Luzon at 53.38, meaning customers faced over 50 sustained outages per year on average.

Batangas Electric Cooperative (BATELEC) I & II: Struggles with Performance and Efficiency

Both BATELEC I and II continued to face criticism over frequent power interruptions and service reliability issues that have eroded consumer confidence across the province.

A province‑wide survey conducted in April 2025 by Capstone‑Intel found that a majority of Batangas residents served by these ECs experienced one to two power outages per month, with some reporting as many as 10 interruptions. Among those surveyed, 93% of BATELEC II customers and 81% of BATELEC I customers reported multiple outages, typically lasting between one and three hours. Respondents in areas served by other distribution utilities reported significantly fewer disruptions, highlighting a notable service gap. Both cooperatives scored below the provincial average on customer satisfaction, reflecting growing public dissatisfaction with their performance.

Local complaints about BATELEC’s service have extended beyond statistics. Residents and business owners have openly criticized what they describe as frequent and prolonged outages that disrupt daily life and economic activity, prompting municipal officials to file resolutions calling for improved electricity service.

Amid this backdrop of reliability concerns, discussions have intensified around a potential partnership with Meralco to bolster capacity and technical expertise for BATELEC II. Business and civic groups in Batangas have backed a proposed joint venture, arguing that Meralco’s financial resources and operational track record could help address persistent outages and improve service quality.

Palawan Electric Cooperative (PALECO): Persistent Service and Governance Challenges

PALECO has faced ongoing criticism for its inability to provide stable and reliable electricity to Palawan residents. Power interruptions remain frequent, with unannounced outages lasting up to an hour, occurring multiple times daily, and scheduled interruptions extending for several hours. The EC’s service woes are particularly acute in high-demand areas such as El Nido, a major tourist destination, where daily rotational load shedding continues despite growing electricity needs.

The cooperative’s struggles have prompted political scrutiny. Palawan Second District Representative Jose Alvarez expressed opposition to renewing PALECO’s franchise in Congress, citing continued service failures.

In 2017, residents began calling for the dissolution of PALECO, alleging that the cooperative consistently failed to meet its service obligations. Consumers reported that during the summer months, Puerto Princesa and southern Palawan regularly experienced prolonged, consecutive blackouts.

By 2019, the situation escalated to legal action. The local government of Puerto Princesa, led by then-Mayor Lucilo Bayron, filed a lawsuit against PALECO, its board of directors, and the acting general manager. The petition, supported by more than 500 residents, cited the cooperative’s ongoing inability to provide reliable electricity and described the city’s power shortages as a crisis that had persisted since 2009.

Financial concerns have further compounded operational issues. A rate increase in late 2023, raising electricity costs from ₱13.67 to ₱14.71 per kilowatt-hour, drew criticism from lawmakers, including House Deputy Majority Leader Erwin Tulfo, who questioned the hike amid persistent outages.

Governance challenges continued into 2024 when NEA deactivated PALECO’s Board of Directors following delays in holding district elections, appointing interim directors to manage operations.

(Also read: New Malampaya Gas Discovery Seen to Boost Energy Security, Ease Power Costs)

Cebu Electric Cooperative (CEBECO) II: Challenges with Storm Recovery and Efficiency

In 2025, CEBECO faced renewed scrutiny over its capacity to maintain reliable service following severe weather and seismic events that disrupted power infrastructure across Cebu province. A 6.9‑magnitude earthquake that struck the region in late September triggered widespread outages, with the NEA reporting that CEBECO II had 60% of its franchise area without or with limited power shortly after the tremor. By October 4, restoration efforts had brought service back to most customers, but the scale of damage highlighted the vulnerability of CEBECO’s network to major shocks.

CEBECO II’s own reports noted extensive damage to equipment, including 86 poles and 16 transformers, and required clearances from municipal officials before power could be safely reconnected to quake‑damaged homes. Despite restoring electricity to nearly all barangays in its coverage area, thousands of households remained without service weeks into the recovery period due to safety and infrastructure issues.

CEBECO II, covering 11 towns and two cities from Compostela to Daanbantayan, was directly impacted by the earthquake. The tremor triggered a total blackout in its service areas after transmission lines were disrupted.

Additionally, Cebu Electricity Rights Advocates (CERA) convenor Nathaniel Chua highlighted that the pace of power restoration has exposed significant disparities across the region. While Visayan Electric Company (VECO) has managed to restore electricity in Metro Cebu with relative speed and reliability, areas served by the Cebu Electric Cooperatives (CEBECOs) and the Mactan Electric Company (MECO) faced slow and inconsistent recovery.

Negros Occidental Electric Cooperative (NONECO): Recurring Outages and Slow Service Response

NONECO has been the object of criticism over recurring power outages and slow response to infrastructure failures in its service area. The cooperative has struggled with repeated transformer breakdowns that have left large swaths of northern Negros Occidental without electricity for extended periods, prompting complaints from local officials and residents alike.

In October 2024, a malfunction at Noneco’s 15 megavolt-ampere (MVA) Victorias substation transformer triggered widespread blackouts affecting up to 300,000 households in towns including E.B. Magalona, Manapla, and Victorias City. Municipal leaders publicly criticized NONECO for its slow response and lack of clear updates on restoration timelines.

The repeated failures have exposed deeper infrastructure and financial constraints. The transformer that failed was itself a unit borrowed from the neighboring Central Negros Electric Cooperative (CENECO), because Noneco lacked funds to purchase replacements. That borrowed transformer had already been in service for nearly a year and was pressed into action after earlier outages caused by storm damage and substation malfunction.

In response to the blackout, NONECO requested temporary power assistance from nearby utilities, with Negros Power providing up to 2 MW of supply to help alleviate the crisis while restoration work continued.

In October 2025, consumer advocacy group Alliance of Concerned Consumers in Electricity and Social Services (Access) publicly backed the proposed partnership between Noneco and Negros Power, framing it as a turning point for power service delivery in Northern Negros.

Access President Wennie Sancho said the endorsement followed months of community consultations across NONECO’s franchise area, where residents repeatedly raised concerns about unreliable service, aging infrastructure, and the burden of high electricity costs. According to Sancho, these discussions highlighted a clear demand for reform and stronger institutional capacity within the cooperative.

He described Negros Power’s proposal not as a takeover, but as a collaborative effort aimed at addressing long-standing structural weaknesses. “Noneco’s facilities have aged through the years, and modernization is necessary,” Sancho stated, adding that the proposal could inject much-needed capital, technology, and operational efficiency into the cooperative.

Northern Davao Electric Cooperative (NORDECO): Legislative and Consumer Scrutiny Amid Service Disputes

In 2025, NORDECO found itself at the center of growing criticism from lawmakers, consumer groups, and local governments over persistent service concerns and disputes over its franchise areas.

The most contentious issue stems from Republic Act No. 12144, which lapsed into law in April 2025 and expanded the franchise of private utility Davao Light and Power Company (Davao Light) into several areas previously served by NORDECO in Davao del Norte and Davao de Oro. NORDECO has challenged the law in the Supreme Court, arguing that the expansion infringes on its existing franchise rights and constitutional protections under the EPIRA and related statutes.

But in late November 2025, parts of the provincial board in Davao del Norte approved a resolution opposing NORDECO’s franchise renewal, citing widespread complaints from residents in Samal Island and other towns about poor service delivery. Critics contend that ongoing outages, perceived inefficiencies, and high power rates have undermined consumer confidence and economic development in the region, particularly in tourism hubs like Samal.

Consumer advocacy group Partners For Affordable & Reliable Energy (PARE) has also singled out NORDECO’s handling of its Wholesale Electricity Spot Market (WESM) obligations, urging greater transparency about its debt and financial management after reports emerged that the EC had significant arrears that led to a temporary suspension from the market.

These financial challenges, combined with service reliability complaints, have strengthened calls from local stakeholders for regulatory intervention and clearer accountability measures from energy authorities.

First Bukidnon Electric Cooperative (FIBECO): Allegations of Misuse of Funds

In 2025, NEA filed criminal complaints against officials from FIBECO.

The complaint against FIBECO targets a former general manager, who faces charges of qualified theft related to financial transactions that never materialized and the alleged diversion of cooperative funds. Specifically, the accusations include a plot to unlawfully purchase a piece of land valued at ₱11.55 million, which was never actually acquired, and the transfer of ₱6 million to a personal account — actions the complaint asserts were executed without proper authority and to the detriment of the cooperative.

Much earlier, in the mid-2000s, FIBECO grappled with internal complaints from employees against its then-general manager, Engr. Jose S. Dela Cruz. Staff accused him of nepotism, insubordination, misuse of cooperative funds and property, and gross incompetence. A NEA administrative investigation found these charges credible, and FIBECO’s Board of Directors dismissed him from service in 2007. NEA later affirmed the dismissal in 2019, which was upheld by the Supreme Court as a valid exercise of its supervisory authority over ECs.

While not an official enforcement action, there have been public complaints and petitions about FIBECO’s electricity rates, especially increases of 30 to 40 % that customers felt were unjustified or inadequately explained. Such consumer-driven petitions reflect ongoing tensions between the cooperative and its customers over cost, transparency, and service obligations

ECs: Obsolete Model or National Burden?

Despite their historical role in expanding rural electrification, electric cooperatives in the Philippines now face growing critique from energy experts, columnists, and policymakers who argue that the current system may be outdated and overly dependent on national funds. Critics point out that prolonged subsidies and structural inefficiencies have not translated into consistently reliable service, prompting questions about the long-term viability of the cooperative model.

Daily Tribune columnist Komfie Manalo highlighted that ECs relied heavily on government support since their inception, yet the areas they serve continue to suffer frequent power outages and service failures. He argued that billions in subsidies should be re-examined or phased out to reduce the undue burden on taxpayers who are not necessarily customers of these cooperatives. He described these subsidies as a “never-ending burden,” as he urged Congress to revisit the preferential treatment afforded to cooperatives, which they say can encourage inefficiency rather than performance improvement.

BusinessWorld columnist Bienvenido Oplas criticized the NEA, calling it one of the “more wasteful agencies in the government.” He noted that the agency received P12.9 billion in 2020 alone, followed by annual allocations of P2 to P3 billion from 2021 to 2025—budgets surpassing those of both the DOE and ERC. According to Oplas, between 2022 and 2024, 27 to 35 ECs each year tapped over P1 billion in loans, highlighting ongoing inefficiency and potential financial mismanagement.

Meanwhile, Manila Times columnist Ben Kritz underscored that the issues many ECs face are chronic. “ He wrote, “If this country is going to realize any of its economic and social aspirations, the parlous state of electricity distribution outside of areas served by big utilities is going to need to be addressed, and soon.”

Together, these critiques suggest that without significant reform, the cooperative model risks being perceived as an obsolete relic that continues to drain national funds without delivering dependable electricity to the communities it was meant to empower.

Sources:

https://nea.gov.ph/about-page

https://ldr.senate.gov.ph/subject/electric-cooperatives-ecs–organization

https://web.philreca.org/about_us

https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/11/39112

https://www.philstar.com/business/2025/05/27/2446224/nea-files-raps-vs-erring-officials-electric-cooperatives

https://www.pna.gov.ph/articles/1259318

https://www.abs-cbn.com/news/regions/2025/9/23/around-746-000-households-hit-with-power-interruptions-due-to-nando-nea-1500

https://www.facebook.com/pioalbay2023/posts/pfbid02DvLg1hhYj6w1HsMxHYLqePQs2vGS18sDzNiXbcqJgU1WgqXJfRvVsFo8mAkmZNtMl

https://www.gmanetwork.com/regionaltv/news/109448/pbbm-vows-to-energize-more-homes-as-bicol-battles-nearly-decadelong-problem/story

https://www.philstar.com/business/2013/10/28/1250152/san-miguel-takes-over-aleco

https://businessmirror.com.ph/2016/03/27/smc-power-in-albay-still-reeling-from-inherited-problems