Press Release
May 30, 2017

Sponsorship Speech
Committee Report No. 98 / Senate Bill No. 1461
An Act Institutionalizing the Electric Cooperatives Emergency and Resiliency Fund and Appropriating Funds Therefor
Session Hall, Senate of the Philippines, Pasay City
May 30, 2017

Delivered by HON. SHERWIN T. GATCHALIAN, Senator of the Republic:

Mr. President, esteemed colleagues, a pleasant afternoon to you all.

As representatives of the sovereign people I believe it is paramount that we stay in touch with the pulse of the people, so that we may ensure that the legislation we pass here in the halls of the Senate are meaningful and relevant to the lives of our constituents. In line with this, as the Chairman of the Senate Committee on Energy, I have had the privilege to travel around the country to speak directly with and listen to the concerns of energy sector stakeholders. The measure that I am sponsoring today is largely a product of consultations and dialogues that I have held with a critical class of energy stakeholders - electric cooperatives. Before discussing the details of this bill, Senate Bill No. 1461 under Committee Report No. 98 - known for short as the Electric Cooperatives Emergency and Resiliency Fund Act of 2017, allow me to discuss its relevance to the situation faced on-the-ground by electric cooperatives and their customers.

Mr. President, I think it is safe to say that most Filipinos are aware of the fact that the Philippines is a disaster-prone country. Since time immemorial, the Filipino people have borne the unfortunate burden of having to weather storm after vicious storm. Sadly, these typhoons often result in significant property damage, dire emergency situations for typhoon survivors or, in the most tragic circumstances, the loss of limb and life of our fellow countrymen.

According to international research, to say that the Philippines is "disaster prone" is an understatement. The situation is much more precarious than that. According to the 2016 World Risk Report, the Philippines is ranked third on the list of countries most exposed to natural disasters, behind only two of our neighbors along the Pacific Ring of Fire: Vanuata and Tonga.

Exposure to natural disasters, however, does not necessarily equate to a high risk ranking on the World Risk Index or WRI. A perfect example of this is Japan. In terms of exposure to natural disaster, Japan comes in fourth place right after the Philippines. However, Japan's actual risk ranking on the WRI is at 17th. This significantly lower risk ranking is attributed to Japan's low vulnerability score, which is calculated by considering the strength of a country's risk reduction, risk management, and emergency response capabilities. Unfortunately, a significantly higher vulnerability score puts the Philippines at 3rd place on the Index proper, which means that the Philippines is the 3rd most at-risk country in the face of natural disasters.

Mr. President, if we dissect the Philippines's vulnerability score, we can see that the problem lies in what the report designates as "lack of coping capacities". Coping capacities are defined in the report as "measures and abilities that are immediately available to reduce harm and damages in the occurrence of an event". In other words, the high risk rating of the Philippines is largely attributable to the weakness of its disaster response programs.

Mr. President, I have chosen to highlight the weakness of the country's "coping capacities" or disaster response programs because this is a crucial problem affecting the ability of electric cooperatives to turn the power back on in a speedy and efficient manner after a storm hits. Prolonged power outages in areas already devastated by a natural calamity make the situation even worse. Disaste and relief operations are hampered. The law and order situation on-the-ground becomes harder to contain. Commercial establishments and industries unequipped with backup power generating capacity suffer significant economic losses.

As the situation stands now, electric cooperatives have few options other than to apply for interest-bearing loans from private financial institutions or the National Electrification Administration, the NEA, to fund their electricity restoration and infrastructure rehabilitation efforts in the wake of a calamity. Although the loans from the NEA can sometimes be converted into grants, this process takes up to two years. Sometimes, due to lack of funds, some NEA loans are never converted. Since 2004, a total of 1.62-billion pesos worth of calamity loans have not been converted to grants.

This lack of disaster response funding puts electric cooperatives in a tough spot. They often have no choice but to pass on the additional costs of the loan to the consumer, which results in higher power rates. For example, the indicative rate impact of a 120.86-million peso loand applied for by a C-rated electric cooperative at 3.25% interest rate to be paid over a 10-year period is an average of 28 centavos per kilowatt-hour. Considering that electric cooperatives fulfill the power needs of more than 85 percent of barangays nationwide, this creates an unfair situation for power consumers in the vast majority of localities within the Philippines. When you think about it, it's like giving out relief goods, only to ask for the disaster survivors to pay for them later. This is an unjust situation, to say the least. That is where Senate Bill No. 1461 comes in.

The Electric Cooperatives Emergency and Resiliency Fund Act of 2017 aims to achieve two things: first, to enhance resiliency by equipping and training electric cooperatives in disaster prevention, preparedness, and mitigation; second, to ensure speedy restoration and rehabilitiation of damaged infrastructure through interest-free grants to disaster-stricken electric cooperatives.

To do this, a 750-million peso Electric Cooperatives Emergency and Resiliency Fund will be established, to be administered by the NEA. Twenty percent (20%) or 150-million pesos will be intended for disaster prevention, disaster preparedness, and disaster mitigation measures, while eighty percent (80%) or 600-million pesos will be dedicated to financing the restoration or rehabilitation of the electric cooperatives' damaged infrastructures after a calamity.

As a prerequisite to access these funds, electric cooperatives are mandated to prepare and submit a Vulnerability Risk Assessment, a Resiliency Compliance Plan, and an Emergency Response Plan to the NEA. Through a Vulnerability Risk Assessment, an electric cooperative is able to to identify, quantify, and evaluate critical assets vis-à-vis top rated threats arising from natural disasters. The Vulnerability Risk Assessment will then be used to prepare a Resiliency Compliance Plan and an Emergency Response Plan. The Resiliency Compliance Plan contains projects and programs to protect and reduce the vulnerability of identified cirital assets, while the Emergency Response Plan includes the structure and procedure for the electric cooperative to restore its system in a safe and timely manner after a fortuitous event or force majeure. Through the creation of these plans, it is our hope to cultivate a culture of disaster preparedness in our electric cooperatives.

Since disaster preparedness, prevention, and mitigation do not occur in a a vaccum and should be holistic and comprehensive, the NEA, taking into account all the submission of electric cooperatives, is tasked to prepare a National Electric Cooperatives Emergency and Resiliency Plan which shall be integrated in the National Disaster Risk Reduction and Management Plan under Republic Act No. 10121 or the "Philippines Disaster Risk Reduction and Management Act of 2010."

In addition, the NEA will be in charge of ensuring a streamlined process for the availment of the fund, thereby equipping electric cooperatives with timely resources to quickly turn the lights back on after a storm, earthquake, or any other fortuitous event ravages its coverage area Mr. President, as we continue to implement reforms to enhance the stability of the Philippine energy sector, I hope that this measure will have a meaningful impact on electric cooperatives and the quality of life of their consumers. The plight of disaster survivors, who are forced to suffer in the dark for weeks or even months after disaster strikes has been neglected for far too long. Upon passage of this measure, we can be sure that when calamity strikes the next time around, the lights will stay on for good. Thank you Mr. President.

News Latest News Feed