The Department of Finance (DOF) and the Department of Energy (DOE) signed on December 4, 2024 a joint memorandum circular that allows qualified electric cooperatives (ECs) to seek tax exemptions from local government units (LGUs), reducing financial burdens and empowering them to expand electricity access to all Filipinos.

Finance Secretary Ralph G. Recto, represented by DOF Undersecretary Bayani Agabin, and DOE Secretary Raphael Lotilla signed the joint memorandum circular, which outlines how ECs can avail of preferential rights under Republic Act (RA) No. 7160 (Local Government Code) in relation to RA No. 10531 (An Act Strengthening the National Electrification Administration).

The DOE and the DOF through the Bureau of Local Government Finance (BLGF) were mandated by Section 18 (c) of the Implementing Rules and Regulations (IRR) of RA No. 10531 to draft the applicable guidelines for this purpose.

The JMC is a swift response to concerns raised by legislators during recent budget deliberations and has the backing of the League of LGUs.

It was drafted with the participation of the DOE, Philippine Rural Electric Cooperatives, the Association of Philippine Electric Cooperatives, the National Electrification Administration (NEA), the Union of Local Authorities of the Philippines, and the League of Cities of the Philippines.

“This is a major step towards achieving our goal of 100 percent total electrification in the country. The savings that qualified ECs gain from this initiative can be passed on to consumers, empowering them to invest more and provide an affordable and reliable power supply for generations of Filipinos, especially in underserved communities. This will help ensure that every Filipino home has a brighter future ahead,” the Finance Chief said.

All non-stock or non-profit ECs registered with the NEA and stock electric cooperatives registered with the Cooperative Development Authority (CDA) are exempted from local taxes, fees, and charges imposed by LGUs.

All ECs must secure an annual certificate of compliance from the NEA demonstrating their adherence to the prescribed financial and operational standards. They must achieve at least a 75% rating based on NEA’s compliance parameters.

This includes maintaining high collection efficiency, achieving a positive net worth, meeting systems reliability and systems loss standards, conducting annual general membership assemblies and district elections as scheduled, implementing electrification projects to attain 100% customer connection, and submitting complete and timely reportorial requirements to the NEA.

Under the JMC, the BLGF is tasked to disseminate the circular to LGUs through local treasurers for proper implementation.

The BLGF is also responsible for monitoring the compliance of LGUs, as well as providing technical assistance.
Meanwhile, the DOE will distribute the JMC through its field offices, review its implementation in coordination with the BLGF, and propose necessary amendments.

NEA, on the other hand, will issue and disseminate guidelines on the financial and operational standards for the issuance of certificates of compliance for the availing of the preferential rights of ECs within 15 days from the effectivity of the JMC.