When NEA adopted the concept of “area coverage”, it meant that electric service must be extended to all prospective consumers in the franchise area (not only the town center but also the outlying barrios), provided that the financial feasibility of the public utility’s entire operation would not be impaired. While the ultimate objective of “area coverage” electrification was to provide service to all prospective consumers, the attainment of such objective would, of necessity, be done in stages. Service would be provided first to the more densely populated areas and then continuously spread out to the more remote consumers. The intent was to develop systems which would be large enough so that the more profitable portions of such system could help absorb the apparently high cost of providing service to the more distant isolated consumers.
The Essence of an Electric Cooperative
An Electric Cooperative (EC) is a non-stock, non-profit member-owned public utility enterprise designed to provide adequate and reliable electric service at reasonable cost to its members. At the time when electric cooperatives were being organized, it covered an average of 10 municipalities with a total population of 100,000 to 500,000 people.
Assumption why electric cooperative applaud in rural electrification:
- The electric co-op, being non-profit and service-oriented in nature, could extend service to the barrios on the principle that the high cost of bringing power to these places can be offset by margins derived in the profitable areas. Unlike an ordinary private enterprise, concerned primarily with returns on its investments, tends to operate only in the thickly populated town centers and would not dare extend the lines to the barrios where the cost of construction is high and profits are in the first thought quite uncertain.
- The electric co-op, covering large areas and population proves to be a most viable system based on the economies of scale, and a most effective means for an integrated power development program in the rural areas.
- The electric co-op serves as an “umbrella” organization in the rural areas. As a supplier of power and lending institution, it fans out to other cooperative projects like small industry co-ops, irrigation associations and other self-help community undertakings.
- In contrast to ordinary private business which is owned and run by few individuals, the co-op belongs to the members who exercise control over it through a board of directors that they elect.
- The electric co-op promotes active participation and involvement among the people in improving their quality of life.
- Co-op margins are returned to the members and the public as a whole in the form of improved service, expanded operation and reasonable rates.