A Proposal Defense

Implementation of R.A. 7832: Effectiveness, Compliance and Challenges

NORMAN A. POLLENTES
MBA Candidate

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INTRODUCTION

Electric energy is one of the

fundamental resources contributory
to the economic progress and
technological advancement of a
nation. Access to such resource
defines the level of a nation’s economy,
competiveness and survival in the
global arena of modern human and
business interactions.

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INTRODUCTION continued …

Access to electric energy resource is both complex

and lethal. Yet, activities of electricity theft or pilferage
in the form of illegal, unsafe or unauthorized
connections are not uncommon. These activities result
to huge financial losses on the part of the power
producers, power transmitters and distribution
utilities. However, in reality, under the current
government regulation, these losses are largely
passed on to the innocent end users of electricity
or the consumers in the form of Systems Loss
charge.
In CENECO alone, every CENECO consumer pays an
additional 5% on the cost of electric generation
because of pilferage. This is equivalent to an aggregate
amount of 5% of 70,000,000 kWh a month at a cost of
6 pesos/ kWh or 21 million pesos per month or 252
million pesos per year that are passed on consumers of
CENECO.
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INTRODUCTION continued …

Furthermore, aside pilferage, because

of the complex nature of electric energy
infrastructures, illegal connection
poses a risk against fire hazards at a
lethal scale. Some fires that claim the
lives of many innocent victims
originated from unsafe illegal
connections.

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INTRODUCTION continued …

Therefore, it is mandatory for

the government to develop laws
that enforce safe and legal
electrical connection and at the
same time penalize violators
and pilferers to ensure safety
and protection of the electricity
consumers and to establish a
venue for safe and legal access
to electricity at a reasonable
cost and create enforcement
taskforce to ensure compliance
to such law.

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INTRODUCTION continued …

One of the laws that were enacted is the

Republic Act 7832 or RA7832. RA 7832
or Anti-Pilferage ACT is a law that was
enacted in the Ninth Congress as the
Republic Act No. 7832 of December 8,
1994. It is an act penalizing the
pilferage of electricity and theft of
electric power transmission
lines/materials, rationalizing System
Losses by phasing out pilferage losses as
a component thereof, and for other
purposes.

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INTRODUCTION continued …

Over the years some ECs were unable to positively manage its Systems Loss
which resulted to huge financial losses from subsidized cost of electricity when
ECs were not allowed to recover portions of the cost of lost electricity. These ECs
eventually failed to completely pay their generators and were eventually taken
over by private capitalist called the investment Management Contractors (IMC).
Later on, these IMCs permanently became permanent owners of such ECs.
ALECO posted a Systems loss of 20%, ZAMCELCO reaches 24%, LANECO was
at 20%. Currently, these ECs suffered financial losses that resulted to eventual
closure of their business.

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INTRODUCTION continued …

• Recent regulatory issuances indicate protracted

reduction of Systems Loss. They are ERC
Resolution No. 20, Series of 2017, and b) NEA
2018 KPS on Systems Loss.
• In the case of CENECO, Systems Loss directly
affects its financial viability. Therefore, its
implementation must be timely monitored and
strategically planned. It must be subjected to
regular SWOT analysis so that un-anticipated
and emerging challenges in the constantly
changing environment can be proactively
addressed to protect CENECO from being
disadvantaged, sustain consumer satisfaction
and compliance of regulatory standards of our
law.

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 INTRODUCTION continued …

The Systems Loss of Central Negros Electric Cooperative, Inc. (CENECO) is at a level
of 11% as of October 2019. Such is within the maximum level of Systems Loss that
the Energy Regulatory Commission (ERC) allows (ERC resolution 2018) at which
CENECO may recover the corresponding SL cost by passing it to its consumers in
the form of Systems Loss charge. For the month of October 2019, the SL charge of
CENECO is P0.80/kwh.

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 Statement of the Problem

The main purpose of this study is to

assess the level of effectiveness and the
extent of regulatory compliance of the
implementation of RA7832 by CENECO in
response to the challenges of tightening
government regulation amidst the
evolving technologies.

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Statement of the Problem continued …

Specifically, it seeks to answer the following questions:

Analytical
Problems Hypothesis Statistical Tools
Schemes
What is the profile of the respondents in terms of : NULL Descriptive Frequency Scoring,
a. Age Percentage
1 b. Length of service
c. Highest educational attainment.
d. Level of management position
What is the level of effectiveness of implementing RA7832
NULL Descriptive Mean
as perceived by respondents in the following areas :
2
a. Allocation of Operational Resources
b. Technological Advancement
What is the extent of Regulatory Compliance in the
implementation of RA7832 as perceived by respondents in NULL Descriptive Mean
3 the following areas :
a. Allocation of Operational Resources
b. Technological Advancement

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Statement of the Problem continued …

Specifically, it seeks to answer the following questions:

Analytical
Problems Hypothesis Statistical Tools
Schemes
What is the level of effectiveness of implementing RA 7832
4 as perceived by the respondents when grouped according NULL Descriptive Mean
to the aforementioned variables?
What is the extent of regulatory compliance of CENECO in
the implementation of RA 7832 as perceived by the
5 NULL Descriptive Mean
respondents when grouped according to the
aforementioned variables?

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Statement of the Problem continued …

Specifically, it seeks to answer the following questions:

Analytical
Problems Hypothesis Statistical Tools
Schemes
Is there a significant difference in the level of effectiveness
of the implementation of RA 7832 as perceived by the
6 NULL Comparative Mann Whitney U Test
respondents when grouped and compared according to
the aforementioned variables?
Is there as significant difference in the level of regulatory
compliance in the implementation to RA 7832 as
7 NULL Comparative Mann Whitney U Test
perceived by the respondents when grouped and
compared to the aforementioned variables?
Is there a significant relationship between the level of
effectiveness and level of regulatory compliance as
8 NULL Relational Spearman Rho
perceived by the respondents in the implementation of RA
7832 in CENECO?

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