clans in the province and the private party, Salcon Philippines, was unable to secure the support of rival factions.

Our recommendation is that the choice of ECs in which IMCs are attempted should be informed by the political economy framework in addition to the technical criteria used to date. Attempted IMCs in highly politicized ECs are likely to fail. However, IMCs can and should be attempted in relatively less politicized ECs — ones that have relatively low rent-seeking potential, are in an area that has relatively less intense local political competition and has high national political salience. This would mean, somewhat ironically, that the IMC model is not recommended to situations where an intervention is most badly needed. It is highly probable that the same political economy factors that have created the performance problems in the first place would undermine the attempted IMC interventions in those worst-performing ECs – here the usual dictum of the political economy of reform that a crisis creates incentives to reform is unlikely to hold. Therefore, a management intervention may be more suitable for those ECs whose performance is at the ―mid-range‖ of the performance variation, although as stated above, specific underlying conditions should be evaluated before a decision to apply an IMC is taken. Now there is a risk that the very act of introducing an IMC will increase the rent-seeking potential and salience of the EC as politicians can use the contract negotiations as a means of extracting rents. Nevertheless, with the appropriate safeguards, IMCs in such select ECs can have important demonstration effects for the eventual institutional transformation of the sector.

# <u>Increasing consumer voice</u>

Although some civil society actors who advocate ―popular democracy‖ and work with cooperatives in other sectors tend to see ECs as a variant of cooperatives which should be run on the basis of the ―voices of the popular sector‖ (consumers, in this case), evidence of effective consumer activism is limited. This is understandable given the collective action problem expected in the nature of the electricity distribution service. The business sector, by virtue of being organized, may be a partial answer to this problem. Polls have shown that the unreliable and insufficient supply of power at reasonable cost is a major perceived obstacle to improving the investment climate in the Philippines. This sentiment was echoed by some of the business sector representatives we interviewed for this study. But here again, there are certain built-in obstacles which may be difficult to overcome, at least in some localities. First, in a large number of small ECs, the weight of the business sector (commercial and industrial users) among the EC clientele is limited, and some of the large businesses (e.g., a large mining company in Toledo City, in the catchment area of the ―best-managed‖ CEBECO III) supply their own electricity or rely on their own back-up generators (e.g., a large sugar mill operator in Bacolod). Second, given the nature of the Philippine political economy often characterized with local factionalism cutting across not only political-partisan but also economic-business lines, mobilization of the business sector could simply amplify the political divide that may be undermining the EC‘s governance and management. Nevertheless, increasing consumer voice through the creation of advisory and supervisory fora with participation of sub-groups of consumers with the greatest stakes in improved services, notably the business community, can provide some of the much-needed checks and balances and improve the governance of ECs. Palawan‘s power commission discussed earlier is a promising initiative that also has the support of the Philippine Chamber of Commerce and Industry who are viewing it as a pilot which can be replicated in other ECs. Our finding is that such an approach is likely to be promising in some ECs but not in most.

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