Malfunctioning

What needs to be done to get our legislators to liberate communities from malfunctioning electric cooperatives?

Enough has been said about the Northern Davao Electric Cooperative Inc. (Nordeco). It has charged its customers among the highest electricity rates in the country. It delivers unreliable and spotty service that has undermined the economic potentials of the community it is supposed to serve.

Our lawmakers have inquired extensively into the terrible service Nordeco delivers. The cooperative is badly run and lacks the capital required to make its service more efficient.

In 2022, after exhaustive hearings, both chambers of Congress voted to terminate the franchise of the errant cooperative. People in the area served, long suffering from unreliable and expensive power, cheered the decision. Unfortunately, President Marcos Jr. decided to veto the bill, saving Nordeco from liquidation.

Since then, several bills have been filed and numerous hearings held on the corporate and technical failings of this particular electricity cooperative. Last May 14, the House committee on legislative franchises held yet another hearing on Nordeco. The cooperative serves parts of Davao del Norte and Davao de Oro.

During this hearing, Rep. Maricar Zamora argued that the area’s “tourism center” should be served by a private utility: Davao Light and Power Co. She refers to Samal Island, which is not part of her constituency.

The option of shifting the area’s power distributor is indeed advantageous for the tourism-related enterprises of Samal. Davao Light sells electricity at only about 50 percent of the price Nordeco charges. The private company offers more reliable service that will liberate Samal Island from debilitating power outages.

In addition, Davao Light has energized more rural communities, 99 percent as against Nordeco’s accomplishment rate of only 78 percent. Furthermore, Davao Light has been paying over P200 million in taxes to the local governments in its service area.

On the basis of all these, Rep. Zamora is correct in insisting Samal Island be allowed to shift to Davao Light for its power needs.

Strangely, however, Rep. Zamora insists that her own district ought to remain with Nordeco – despite the glaring disparities in power costs and service reliability. She justifies retaining her district under Nordeco on the strange excuse that she had not heard her constituents “clamor” for a new service provider and that the malfunctioning power cooperative must be given a chance to improve.

Perhaps she has not been listening to her constituents well enough. Staying with Nordeco will compromise her district’s economic progress. With costly power and unreliable electricity delivery, the first district of Davao de Oro will lag behind the other communities. The district will not be able to attract investments and no new enterprises that offer quality jobs will be set up.

Rep. Zamora chooses to side with Nordeco rather than with the long-term wellbeing of her constituents. Something is amiss here.

Nordeco is badly managed. It is not likely this cooperative will be able to raise the capitalization needed to improve its service.

This particular cooperative exemplifies the general trend. It does not have the magnitude of operations necessary to achieve economies of scale. Many of our electric cooperatives need to merge and consolidate to achieve better utility economics.

Terminating the franchises of worst performing cooperatives might seem a drastic move. But it is necessary to abet the process of consolidation by terminating the franchises of the most seriously malfunctioning cooperatives.

Coal

We need a little more proportional thinking about our energy resources, considering the thinning of our reserves and the frequency with which red and yellow alerts have been raised.

The past few years, we were all agog about the promise of renewable energy (RE). Financing green energy projects were made easier. Financial institutions, trying to meet their own carbon reduction targets, were always more than ready to extend loans to new RE investments.

The multilateral institutions, government policymakers and the general public were all cheering RE. But now we know that RE cannot be relied upon to deliver the baseload capacity we need to build an industrial base and attract more investments in manufacturing. No one will invest in an economy with thin power reserves and the constant threat of outages.

Everybody hates coal plants – despite new technology that lowers the pollution they create. The so-called “woke” crowd hates nuclear technology – despite technological gains in improving their safety.

It remains, however, that the only way to improve the reliability of our energy supply is to build more coal plants and explore the viability of modular nuclear plants. Otherwise, the country will always be teetering on the brink of power shortages and severe economic disruption.

We could be using more natural gas plants. But the unreliability of our own supplies of natural gas, especially since we could not drill in the contested areas of the South China Sea, reduces the viability of this source of energy.

At the moment, a significant chunk of Luzon’s energy plants use natural gas. The supply from the Malampaya field, however, is thinning out fast.

Recently, Meralco announced it is exploring the viability of modular nuclear power plants to boost its supply in the face of rapid industrialization coupled with rising household demand.

We cannot put all our eggs in the basket of renewable energy. We did not invest enough in coal plants that would enable us a stable supply base. That is now a problem.