RapubHcofthephiftypines
HOUSE 0F REPRESENTATIVES
Quezon City
FirstRgivsessinn
NINEl`EENIIICONGRESS
Hou`si;I^LLNo.6?4&
IntroducedbyRapresenfath7eMargrrhalgnada8.Nogndes
HXPLANATORY NOTE
This bill seeks to expand Davao Light Power and Company, Inc. ("Davao Light")'s franchise to establish,
operate, and maintain, for commercial purposes and in the public interest, a distribution system for the conveyance
of electric power to the end-users in the Municipalities of Asuncion, Kapalong, New Corella, Sam Isidro and
Talaingod, and in the City of Tagum and Island Garden City of samal, all in the Province ofDavao Del Norte,
and the Municipality of Maco in the Province of Davao de Oro (the "Franchise Area"). This bill, in effect, shall
amend the existing franchise of Northern Davao Electric Cooperative, Inc. ("NORDECO") by reducing its franchise
area, in accordance with the transitory provision included in the bill.
NORDECO, formerly known as Davao del Norte Cooperative, Inc. ("DANECO"), is an electric cooperative
that was granted a franchise by virtue of Certificate Nos. 017 and  103  issued by the National Electrification
Administration for a period of fifty (50) years from 1978 and 1983, respectively. It was organized to provide
affordableanddapendableelectricityovertheFranchiseArea.Inits2019AunualGeneralMembershipAssembly,
consumer-members agreed to rename it into a unified entity as NORDECO.
Over the years, NORDECO has suffered from losses and conflicting factions within the cooperative which
have  led  to  inadequate  infrastructure,  piling  debts  to  service  providers  including power suppliers,
cancelledpowersupplycontracts,excessivesystemslosses,andfailuretoenergizepartsofitsfrancbisearea
even up to this time. The Local Government Units of the Franchise Area reached out to the NORDECO Board of
Directors to improve their service, and the problems of NORDECO persisted.  Hence,  the   Local   Government
Units  executed  a  joint  resolution  for  the  replacement  of


NORDECO as the distribution utility in the Franchise Area, which was referred to the Department of Energy
and the Energy Regulatory Commission.
With these inefficiencies in the delivery of power distribution services and failure to ensure the reliable supply
of power,  the  Franchise  Area  continues  to  experience  frequent  power  outages,  thereby  impeding  economic
development therein. Sadly, the Franchise Area has been left behind by its neighboring municipalities and cities,
particularly,  those  within  the  franchise  area  of Davao  Light,  which  have  continued  to  enjoy  stable
electricity services.
In order to alleviate the plight of constituents in the Franchise Area, and consistent with the govemment's goals
to  promote  maintain  the  public  interest  and  pursue  overall  growth in Mindanao,  the  constituents  in the
Franchise Area have reached out to their local governments to cause the betterment of electric services in the
Franchise  Area.  In  turn,  the  local  officials  acted  on  their  constituents'  expressed  desire  to  be  liberated  from
NORDECO's long-standing poor and unreliable electric service. Such public clamor has been echoed many times
in  statements  of support  issued  by the Provincial Government of Davao del Norte, business chambers,  non-
govemmental organizations, and other stakeholders, as well as the statements of no objections issued by national
agencies such as the Department of Energy and the National Electhfication Administration.
In keeping with  due process,  NORDECO has  been  given  ample opportunities  to  address  the  complaints  of its
customers, including during the initial deliberations for the original bill, House Bill No.  I 0554. The Philippine
Rural  Electric Cooperatives Association  ("PHILRECA"),  local  government  officials,  and members  of the
business communities in the Franchise Area, likewise actively participated during the deliberations.
Despite  NORDECO's  explanations  to  the  Senate,  the  clamor  from  the  customers  and  residents  in  the
Franchise Area remains persistent due to the increasing price of electricity in NORDECO and the continued
inefficiencies of its service.
Given its stature as the third largest privately-owned electric distribution utility in the country, with respect to
customer size and annual hilowatt-hour sales, as well as its track record for excellent service and close proximity
to the Franchise Area, Davao Light possesses the required expertise to effectively and efficiently provide
electricity distribution services in the Franchise Area considering that it is already the distribution utility serving
half of the municipalities and cities in the province ofDavao del Norte. The operation by Davao Light of the
electricity distribution services in the Franchise Area will redound to the greater good of the residents in the
Franchise Area and will bring about stable and reliable supply, and, ultimately, economic progress therein. This
is also in keeping with the Constitutional power of Congress to grant and repeal franchises when the
cormon good so requires.
Furthermore, the bill's provision to manage the transition of operations from NORDEC0 to Davao Light
has been revised so that customers within the Franchise Area


experience  secure,  reliable,  and  cheaper  electricity  in  the  process.  NORDECO's  existing  suppliers  have  the
opportunity  to  improve  generation  prices  resulting  from  the  Competitive  Selection Process that may be
conducted by Davao Light for the Franchise Area.
In view of the foregoing, the re-passage of this timely measure is most respectfully sought.


RapublicofthePhilippines
HoUSEOFREPRESEr`ITAITVES
Quezon City
First Regular Session
NINETEENTH CONGRESS
HOU-SE`BiL^L No.    6i{ 0
II`ITR0Ducrm B¥ IREp.  MAREARITA IGr`IAuA R NOGRAIHS
ANACTINCLUDINGTAGUMCITY,TIREISLANDGARDENCITY0FSAMAL,ANDTRE
MUNICIPALIThs  0F ASUNCION, KAPALONG, NEW  CORELLA,  SAN ISIDRO AND
TALAINGOD,INTHEPROVINCEOFDAVAODELNORTE,ANI)TIIEMUNICIPALITYOF
MAcO, IN THE pROvlNCE OF DAVAO DE ORO TO Tlm FRANCHlsE AREA OF THE
DAVAO  LIGHT  AND   pOwER  cOMPANy,  INc.  AMENDING  FOR  THE  puRrosE
REpuBLlcAorNO.11515,m`ITTII.ED"ANACTExrENDINGFORANOTHER
TWEI`ITY-FIVE (25) YEARS THE FRANCHSE GRANTED T0 THE DAVA0 LIGHT AND
POWER  COMPANY,  INC.,  UNDER  REPUBLIC  ACT  NO.  8960,   ENTITLED  `AN  ACT
FURTRER EXTEroING THE TERM OF THE FRANclnsE GRANTED TO DAVAo LIGHT
ANDPOWERCOMPANY,INC.T0CONSTRUCT,OPERATEANDMAINTAINANELECTRIC
LIGHT, HEAT AND POWER SYSTHM IN DAVAO CITY AND THE MUNICIPALITIES OF
cARunN,  PAN:ABO, DunALI, AI`un SANTO TOMAs, pROvINCE OF DAVAO DEL NORTE,
FORAPERIODOFTWHNTY-FIVE(25)YEARSANDFOROTHERPURPOSES"
Be  it  enact_e4  dy  the  Senate  and  Hottse  o.f. Representatives  Of the  Philippines  in
Congress assembled:
SEC"ON1.Sedon1ofRquhafroActNo.11515isaneirfedtoreadasfonows:
"SECTION   I.                    jvczfwre   cz#cJ   Scape  a/ Frcz#cfoz.sc.   -Subject  to   the
provisions of  the Constitution and applicable laws, rules and regulations, the franchise granted to the Davao
Light and Power Company, Inc., hereunder referred to  as the [g]Grantee, its successors or assignees,
under Republic Act No.  8960,  to  construct,  install,    establish,  operate,  and maintain  for


conrmereial purposes and in the public rfurty an elerfuc, licht heat and power system fu the
cunveyarroe, distribulon and sale Of dechc power to the end users in Davao City, Panaho City,
TAGUM CITY. THE ISLAND GARDEN CITY OF SAMAlrfu and the Municipalities of
Carmen, Dujali, [and] Santo Tomas, ASUNCION. KAPAljoNrh NEW CORELLA. SAN
ISII}Ro  AND  TALAINcOD  in  the  Province  of  Ihavao  del  Norte,  AE|D  TIE
MUNICIPAI.ITY OF  MACO IN Tlm PROVINCE 0F I)AVAO DE 0RO  is  hereby
extended for another twenty-five (25) years after the expiration date of the franchise under Republic
Act No. 8960.
"As  used  in this Act,  distribution  system refers to  the  system of wires  and associated
facilities, including subtransmission lines belonging to or used by a franchised distribution utility,
extending between the delivery point on the national transmission system or generating facility
and the metering point or facility of the end user."
SEC. 2.    A new section denominated as Section 21-A is inserted after Section 21  of the same Act, to read
as follows:
C`SEC.  21-AL.  TRANSITION  OF  OPERATIONS.  -  TO  EINSURE  THE
UNINTERRUPTED  SUPPLY OF ELECTRICITY, TIH         NORTHERN
DAVAO ELHc"c cOOpERATrvE OroRDHcO) IN THE INTERIM, Is
AUTHORlzED    TO    OpERATE    THE   E]nsTING   DlsTRIBUTION
sysTEM wlTIIIN ITs roRRERFRANCHlsE      AREA    INCLUDE  IN
THE      GRANTEE'S  FRANCHISE  AREA  PURSUANT  T0  SECTION  1
IIEREOFASAMENDED,    AND      IMPLEMENT     ITS    EXISTING
POWER SUPPLY  AGREEMENTS  WITII  GENERATION  COMPANIES
THAT ARE PROVISIONALLY OR FINALLY APPROVED BY TIIE ERC
UNTIL  HIE  GRANTEE ESTABLISHESOR   ACQUIRES    ITS
OWN   DISTRIBUTION   SYSTEM   AND   FULLY   TAKES   OVER   THE
OPERAHONS IN TErn FRANclHSE AREA INCLUDED IN   Tlm
GRANTEE'S     FRANCIIISE         AREA PURSUANT                 T0
SECTION 1       HEREOF  AS         AMENDEL.         NORDECO          MAY
OPERATE NOT LONGER THAN TWO (2) YEARS  FROM     TIIE
APPROVAL       OF       THE       EXPANDED    TERRITORY    0F    THIS
LEGISLATIVE FRANCIIISE.
"UPON COMPLIANCE WITII TIIE RULES, TIIE ERC SIIALL GRANT
NORDECO   THE   NECESSARY   PROVISIONAL   CERTIFICATE   OF
PUBLIC  CONINIENCE AND NECESSITY  (CPCN) COVERING  THE
TRANSITION    PERIOD.    THE    ERC     SIIALL    DETERMn`m    rlHE
APPLICABI,EGENERATIONRATE.


"THE  GRANTHE  MAY  CONDUCT  A  COMPETITIVE  SELECTION
PROCESS (CSP) FOR THE ELECTRICITY REQUIREMENTS IN ITS
ExpANDED  FRANCHlsE  AREA,  pRoytDED  r#4r  pERsoNS  oR
ENTITIES   THAT   ARE   SUPPLYING   NORDECO   ELECTRICITY,
PURSUANT      TO      SUPPLY     AGREEMENTS     APPROVED      0R
PROVISIONALLY  APPRI}VED BY TRE ERC, AS 0F THE DATE TEE
ExpAVsloN oF  TIRE  GRANTEE's  FRANCEHSE  AREA LApsEs  n`ITo
LAW,  SHALL HAVE AN OPPORTUNITY TO IMPROVE ANY OFFER
MADE BY A IVINNING BIDDER IN THE GRANTEE'S CSP OVER ITS
ExpANDED FRANCHlsE AREA, pRorzDED FLrarHER rHAr sucH
OFFER sHouLD BE pRopoRTloNATE To THH CAPAcrr¥ oF sucH
PERSON'S 0R ENTITY'S  EXISTING  SUPPLY  AGREEMENT  IVITH
NORDECO.
"THE  PROVISIONAL  AUTHORITY  TO  OPERATE  DURING  THE
TRANSITION PERIOD GRANTED T0  T::E NORDEC0  SHALL NOT
PREVEI`IT  TIIE   GRANTEE   FROM  EXERCISING   THE  RIGIIT   0F
ENINENT DOMAIN As pROvlDED UNDER sncTloN 9 OF THls ACT.
``T0 REDUCE TIIE LENGTH 0F TIRE TRANSITION PERIOD, TIIE ERC
AND ALL AGENCIES  ISSUING THE  REQUISITE  LICENSES  SIIALL
PRIORITIZE ALL APPLICATIONS OF TIIE GRANTEE RELEVANT T0
THE  ESTABLISHMENT  AND  OPERATION 0F TIIE DISTRIBUTION
SYSTEM UNDER ITS FRANCHISE.
"INTHEHIRINGOFEMPLOYEES,THEGRANTEESHALL,ASFARAS
PRACTICABLE   AND   SUBJECT   TO   CERTAIN   QUALIFICATION
STANDARDS,  GIVE  PREFERENCH  TO  FORMER EMPLOYEES  0F
NORDEC0 WHEN IT COMMENCHS BUSINESS OPERATIONS IN ITS
NEW FRANCHISE AREA.
"TIIE  GRANTEE AND NORDEC0 SHALL JOINTLY ENSURE  THAT
AFFECTED EMPLOYEES NOT HIRED BY THE GRANTEE ANI) NOT
RETAINHD  BY  NORDEC0  SIIALL,  TO  THH   EXTENT   ELIGIBLH,
RECEIVH ALL SEPARATION OR


RETIREMENT  BENEFITS  IN  ACCORDANCE  WITH  APPLICABLH
LAWS.
"AN   INFORMATION   DISSEMINATION   CAMPAIGN   REGARDING
PtJBLIC SERVICES AND OPERATIONS 0F TEE GRANTEE SHALL BE
MADE TO ALL END USERS IN THH FRANCHISE AREA.
``THE  DOE  SHALL,  DURING  THE  TRANSITION,  INSURE  THAT
THE  SUPPLY  OF  ELECTRICITY  IN  THE  EXISTING  FRANCHISE
AREA IS UNINTERRUPTED."
SEC.  3.    All  laws,  decrees,  orders,  resolutions,  instructions  and  rules  and  regulations  or parts
thereof which are inconsistent with this Act are hereby deemed repealed or  modified accordingly.
SEC. 4.          This Act shall take effect fifteen (15) days after its publication in the
%cz.al Gaee#e or in a newspaper of general ciloulation.
Approved,