If 10 mayors from Laguna province were to be asked, the First Laguna Electric Cooperative, Inc. (FLECO), the main power distributor for the province’s mostly underdeveloped eastern area, has become a stumbling block in their goal for economic progress in the area due to exorbitant electricity costs and deficient service.
The eastern side of Laguna province is poor. An electric cooperative has made this happen. That cooperative is First Laguna Electric Cooperative, Inc. or FLECO.
FLECO sells electricity to consumers at rates that have discouraged investors to park funds in the area. The cost of electricity has also become the biggest reason inflation is high in the province.
Cost of power distributed by FLECO in east of Laguna is about P5.00 higher per kilowatt-hour (kWh) than in the Manila Electric Company (MERALCO)-serviced west side of the province.
Ten mayors of towns serviced by FLECO are up in arms against the cooperative, citing the fact that high cost of electricity has made their towns and its people poor.
These mayors have registered opposition to the renewal of FLECO’s 50-year franchise that will end in 2028.
Opposition
In its recent petition to Congress, local executives of at least 10 of the 11 towns serviced by FLECO – Cavinti, Famy, Kalayaan, Mabitac, Paete, Pagsanjan, Pakil, Pangil, Siniloan, and Sta. Maria – said high electricity rates compounded by poor service has hindered economic development in FLECO’s service area.
The opposition, led by Pakil Mayor Vince Soriano, was drafted in response to House Bill 6484 filed by 4th District Representative Jam Agarao last December 2022, which aims to extend FLECO’s 50-year franchise.
Soriano, who among the mayors was one of the most vocal when it comes to promoting socio-economic development in Laguna’s eastern side, claimed that FLECO has allegedly “failed” to mitigate the increasing electricity prices for its captive market, violating its mandate under the Electric Power Industry Reform Act of 2001 (EPIRA, IRR Rule 7, Section 4h) “to supply the electricity in the least cost manner.”
High electricity rates
Consider, they said, the fact that FLECO’s residential rate in February this year was P14.9831 per kilowatt hour (kWh), or P3.3004 higher than its rate in February 2019 of P11.6827/kWh.
By contrast, the overall residential rate imposed by MERALCO was only P10.8895/kWh during the same period.
And a recent attempt by FLECO in social media to allay opposition by claiming that its electricity rates are going down have only drawn guffaws among its consumers.
According to an infographic posted by the electric cooperative in its social media space on June 15, its overall electricity rates went down by P0.5433/kWh due to lower prices of coal in the global market.
But that same infographic showed that FLECO's current generation charge remains high at P11.9735/kWh (for residential areas), P12.0343/kWh (low voltage), and P10.3008/kWh (high voltage).
That's still significantly higher than Meralco’s average generation charge of P7.6697/kWh it reported this June, notwithstanding the fact that the electricity distributor for Laguna’s western area warned of a possible increase for its overall power rate by P0.4183/kWh for this month.
High inflation
This corresponds with the significantly "high" inflation rates of electricity and other utilities in the province reported by the Philippine Statistics Authority (PSA).
Data released by PSA showed that inflation rate of the "Housing, Water, Electricity, Gas, and Other Fuels" commodities sector was reported at 5.6 percent last May 2023, a 0.9-percent decrease from May 2022 but still significantly high.
The mayors also pointed out that the current high rates endured by FLECO’s consumers were not reciprocated by quality service, as evidenced by the frequent power interruptions in its service area which has inconvenienced the 76,339 households currently serviced by FLECO.
“We urge the lawmakers to reflect on the wider ramifications and prioritize the collective interests of the community over the electric cooperative’s own interests,” Soriano said.
Economic impact
Given that FLECO’s service area is currently one of the less-developed areas in Laguna province, FLECO’s continuing poor record is a hindrance to efforts to promote economic development in the area, according to the mayors.
This meant that these towns, whose economies already represent “roughly 11 percent” of Laguna’s per-capita gross domestic product (GDP) in 2021, or P271,470 per capita, will have a harder time to maximize their potentials as tourism magnets and economic hubs in the province.
“We are very concerned that due to FLECO’s unreliable service, investment inflows in our towns have become anemic, retarding the growth of our local economy and the improvement of our constituents’ welfare and living conditions,” Soriano said.
This view has been supported by several consumer groups that have also voiced their opposition to the extension of FLECO’s franchise.
“Uninterrupted and reliable power supply are absolute preconditions for manufacturing hubs to invest in particular areas. Laguna towns within FLECO’s service area will fail to ride on the country’s continuing economic growth if it remains dependent on a middle-of-the-road service provider. In fact, these areas have failed to join the growth of other Laguna economic hubs such as Sta. Rosa and San Pedro precisely because of unreliable power supply,” Infrawatch PH, a progressive think tank, said in a recent statement.
No response
In a message sent to OpinYon Laguna last June 16, FLECO has declined to offer its side on the petition of the mayors against the extension of their franchise.
“FLECO has decided not to comment further on the issues being thrown by Mayor Vince Soriano. The Electric Cooperative will answer all questions in the proper forum, at the House of Representatives,” read the message.