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Manila Bulletin devider Business devider NEA sets new requirements for ECs to obtain LGU tax exemptions

NEA sets new requirements for ECs to obtain LGU tax exemptions

Published Jan 15, 2025 12:24 am

Electric cooperatives (ECs) seeking exemption from local taxes, fees, and charges imposed by their local government units (LGUs) must meet performance standards set by the National Electrification Administration (NEA).

According to the NEA, to qualify for the exemption, ECs will be evaluated on several criteria to ensure they provide reliable and efficient power distribution services.

First, ECs will be scored based on the frequency and duration of power outages. Second, power cooperatives must achieve at least 90 percent collection efficiency. Those with 97 percent or higher will receive the highest score.

Third, ECs must maintain positive financial results, including reinvesting funds for sustainable capital expenditures (CAPEX).

Fourth, ECs must conduct Annual General Membership Assemblies and District Elections as scheduled. Fifth, ECs need to achieve a 90 to 100 percent energization rate.

Finally, timely submission of reports and requirements, including the corporate operating budget, is mandatory.

ECs also need to achieve a 75 percent score on these performance criteria to receive a ‘Certificate of Compliance’.

The certificate is a prerequisite for availing of preferential tax rights from LGUs, as provided by the Local Government Code and the NEA Reform Act of 2013.

NEA said these parameters aim to ensure efficiency, transparency, and commitment from power utilities to minimize electricity interruptions.

The guidelines were released last week and apply to both stock and non-stock ECs. This follows a December memorandum signed by the Department of Energy (DOE) and the Department of Finance (DOF) exempting ECs nationwide from LGU taxes.

Related Tags

National Electrification Administration (NEA) local government units (LGUs) Electric cooperatives
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