The Power Of Disinformation

The Northern Davao Electric Cooperative (NORDECO) has once again found itself in the crosshairs of controversy amid its struggle to maintain its grip over its franchise area.

Adding to NORDECO's woes is its significant debt burden. The cooperative is saddled with loan obligations amounting to PHP7.9 billion, which, according to the Davao Consumer Movement, severely hampers its ability to invest in infrastructure improvements and expand its operations. I Illustrator: ASK

Recent allegations of disinformation, as claimed by Ryan Amper, Convenor of the Davao Consumer Movement (DCM), have further tarnished the cooperative’s image. These accusations stem from NORDECO’s response to the passing of a committee report that seeks to expand the franchise area of the Davao Light and Power Company (Davao Light).

The core of NORDECO’s alleged disinformation revolves around claims of a potential increase in power rates, specifically a P0.30/kWh hike, should Davao Light take over the cooperative’s service areas.

NORDECO has been amplifying this statement from the Energy Regulatory Commission (ERC) during committee hearings, but as Amper points out, critical context has been conveniently omitted.

According to the ERC, this P0.30/kWh increase was merely a result of simulations based on the scenario where Davao Light would absorb all of NORDECO’s power contracts.

However, the truth is far from NORDECO’s narrative.

The ERC Clarifies: Competitive Selection Process as a Key

The ERC has since gone on record to explain that a power rate increase could be avoided. The proposed law includes provisions allowing

Davao Light to conduct a “competitive selection process” for new power supply contracts, potentially securing cheaper power sources than those currently held by NORDECO.

This clarification was echoed by both lawmakers and executives of AboitizPower, the parent company of Davao Light, during the hearings.

Furthermore, ERC officials reiterated that Davao Light's ability to serve a larger population could result in lower overall power rates.

By spreading its operational costs over a broader base, Davao Light’s efficiency could translate to more affordable electricity for consumers. Thus, the claim of an automatic price increase following the takeover of NORDECO’s franchise area is misleading at best.

NORDECO’s Financial Struggles: PHP7.9 Billion in Loans

Adding to NORDECO's woes is its significant debt burden. The cooperative is saddled with loan obligations amounting to PHP7.9 billion, which, according to the Davao Consumer Movement, severely hampers its ability to invest in infrastructure improvements and expand its operations.

This financial strain further underscores why NORDECO is struggling to keep pace with the region’s energy demands and why alternative solutions, such as Davao Light's potential takeover, are being considered.

AboitizPower's Interest in Acquiring NORDECO

As NORDECO battles accusations of disinformation, AboitizPower Distribution Utilities has expressed interest in acquiring the struggling cooperative to provide consumers with more reliable and affordable power.

As reported from the sidelines of the Enlit Asia 2024 event, Anton Perdices, AboitizPower’s COO, emphasized the benefits of 24-hour electricity at lower rates, a luxury enjoyed by Davao Light’s customers but lacking in NORDECO’s service areas.

While the acquisition process is far from simple, AboitizPower remains committed to improving power distribution standards.

Perdices noted that technical due diligence would be necessary, with initial asset purchases ranging from P700 million to P1 billion, covering crucial upgrades like distribution transformers and meters to ensure service quality matches Davao Light’s standards.

NORDECO’s Struggles: A Grim Reality

NORDECO has faced mounting criticism from both lawmakers and consumers for its inability to provide stable, reliable, and affordable power since its establishment in 1971.

Despite being assigned to cover 16 municipalities, two cities, and two provinces (Davao de Oro and Davao del Norte), the cooperative has failed to keep up with growing energy demands and provide competitive rates.

In early October, the House Committee on Legislative Franchises argued that NORDECO had failed to meet its obligations, prompting discussions on granting Davao Light the authority to expand its coverage.

In contrast, Davao Light has consistently delivered quality service to its franchise area, covering Panabo City and several municipalities in Davao del Norte. The proposed expansion is widely seen as a solution to the persistent power woes in NORDECO’s jurisdiction.