The Philippine Rural Electric Cooperatives Association (PHILRECA) has urged the Energy Regulatory Commission (ERC) to speed up the approval of electric cooperative capital expenditure (CapEx) applications, saying prolonged regulatory reviews are delaying investments needed to modernize power distribution systems.

In a statement released after President Ferdinand Marcos Jr.’s State of the Nation Address (SONA), PHILRECA said 107 CapEx applications filed by 62 electric cooperatives (ECs) between 2011 and 2023 remain under evaluation by the ERC.

The projects include investments in new substations and advanced metering infrastructure, which PHILRECA said require prior approval from regulators before cooperatives can spend their capital funds.

“Without official approval, ECs are legally prohibited from utilizing capital funds to support modernization without facing severe penalties, which in turn, will further strain their limited cash flows,” the association said.

PHILRECA said the pending applications illustrate broader challenges facing electric cooperatives, which it said operate under stricter regulatory oversight than privately owned distribution utilities.

Beyond the approval process, the group said ECs are also contending with financial pressures that affect their ability to invest in their networks.

It cited a joint study with the National League of Electric Cooperatives Finance Managers of the Philippines (NLECFIMAP), which found that electric cooperatives accumulated more than PHP 71 million in unreimbursed claims under the government’s Uniform National Lifeline Subsidy Program between March and May 2026.

PHILRECA also said rising transmission-related charges and volatility in the Wholesale Electricity Spot Market (WESM) have added to the sector’s financial burden, while lower collection efficiency following the government’s no-disconnection advisory has further constrained working capital.

The association called on the ERC and the Department of Energy (DOE) to impose mandatory timelines for processing CapEx applications and expedite the release of validated subsidy reimbursements. 

It also urged Congress to pass measures exempting electricity sales from the 12% value-added tax (VAT) and condoning penalties owed by financially distressed electric cooperatives.

“Energy security is vital to national stability, but it cannot be built on a foundation of scapegoating,” PHILRECA said. “Electric cooperatives remain fully committed to modernizing their distribution networks, adopting renewable energy solutions, and expanding rural access.”

The group said achieving the country’s energy security goals would require coordinated action across the electricity supply chain, including regulators, generation companies, transmission operators and distribution utilities.

What are your thoughts? Should the government prioritise faster approval of electric cooperative projects as part of its power sector reforms? Join the discussion in the comments.

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