NEA wants finances to play bigger role in power cooperative ratings

THE National Electrification Administration (NEA) said it is seeking to amend the classification system for electric cooperatives (ECs) to better reflect their technical and financial capacity.

“I want (the categories to reflect) the true state of operations both on the technical and financial management aspects,” Antonio Mariano C. Almeda, NEA administrator, said in a briefing last week.

Mr. Almeda said that financial management should weigh more heavily in how ECs are rated.

“The department that undertakes the categorization and I will be implementing major amendments into the criteria involved because I have to put emphasis on the financial management,” Mr. Almeda added.

According to NEA, ECs are currently rated based on performance standards. ECs with the highest rating will be given a score of “AAA” which indicates that the EC complied with the parameters set by NEA such as financial, regulatory, and operational soundness in the agency’s performance, while ECs with the lowest rate are given a grade of “D.”

In June 2022, NEA reported that 72% or 87 of the 121 ECs received the top AAA rating; nine ECs were rated AA, five A, seven B, six C and seven D.

“Financial management, for me, will be a big reflection of how the day-to-day operations and the level of accomplishment or level of efficiency of a certain co-op will be put into figures. Financial management is the bulk for me because I am taking it from the idea that it is the money of the consumers, not the co-ops, and it is my mandate to protect the money of the consumer-members,” Mr. Almeda said.

Based on the current categorization, NEA assigns financial criteria a maximum of 25 points, institutional strengths 30 points, technical capacity 20 points, level of electrification 20 points, and compliance with reporting requirements five points.

A triple A rating indicates that the ECs scored 95-100 points; AA 90-94 points; A 85-89 points; B 7584 points; C 50-74 points; and D 49 points and below.

“There will be co-ops for sure that will go down in categorization… PSALM (Power Sector Assets and Liabilities Management Corp.) (has) one co-op that is rated AAA but owes PSALM around P1.5 billion,” Mr. Almeda said.

PSALM, which is headed by Dennis Edward A. Dela Serna as its president and chief executive officer, is the agency tasked with privatizing government power industry assets.

Mr. Almeda did not identify that EC, but added, “at least this EC should take measures to amortize or fulfill payment… I suppose you have retained earnings at the end of the year so you have to allocate something to pay off (debt in arrears).” —