ECONOMIC HUB Mayon Volcano is a perfect backdrop to Legazpi City, the regional center of Bicol and one of the major economic hubs in Southern Luzon. A conflict between the private power distributor and the local electric cooperative threatens to disrupt electricity supply in Legazpi and the rest of Albay province. —MARK ALVIC ESPLANA
LEGAZPI CITY — Households and businesses in Albay may have to deal with a widespread outage around October amid a conflict between the private power distributor in the province and the local electric cooperative.
The Albay Power and Energy Corp. (Apec) announced on Tuesday that it would no longer provide credit guarantee for the purchase of electricity at the Wholesale Electricity Spot Market (WESM) under the account of Albay Electric Cooperative (Aleco).
This came after member-consumers of Aleco voted for the termination of the 25-year concession agreement with Apec through a Special General Membership Assembly on Sept. 3.
“With due consideration to such resolution and to provide the National Electrification Administration (NEA) and Aleco the opportunity to procure power supply for their own account, please be informed that beginning 00:01 of Sept. 4, Apec will no longer provide any form of credit guarantee for the WESM purchases under the Aleco account,” Apec said in a statement.
Apec, a subsidiary of San Miguel Corporation Global Power Holdings, took over the operation of the debt-ridden cooperative on Feb. 26, 2014. It has 205,000 subscribers spread in 15 towns and three cities of Albay.
Apec gets its power supply from San Miguel Energy Corp. (SMEC) and the WESM.
CITY CENTER Business establishments at the city center of Legazpi rely on stable power supply to sustain their operations. —CARL JAMES TOLARBA/CONTRIBUTOR
Continuous supply
Apolinario Alvarez, chief operating officer of Apec, said the credit guarantee to SMEC would also be pulled out, thus fully exposing Aleco to the spot market.
“We pulled out the credit guarantee which was one of the reasons why the supply of electricity [in Albay] has been continuous for almost eight years despite [the] shortage of payment to the power suppliers,” Alvarez said in a phone interview on Tuesday.
He clarified that the credit guarantee given to power suppliers was not part of the provisions of the concession agreement, noting that Aleco, not Apec, is a member of the Independent Electricity Market Operator of the Philippines (Iemop) of WESM.
Alvarez said Albay consumes 48 to 50 million kilowatt-hours (kWh) a month. If the WESM price on Tuesday was P12 per kWh, then Aleco would need to pay P600 million monthly, he said.
“If consumers will not pay for their consumed electricity and pilferage will be more rampant, the system loss will rise and that could likely lead to a power cut from Iemop,” Alvarez added.
Retaliation
The next billing cutoff is on Sept. 25. If the bill will not be settled within the period designated for payment, Apec will be given a notice before power is cut around next month.
Albay Gov. Noel Rosal said Apec should improve its collection efficiency to at least 95 percent and reduce its nonpower expenses.
“If their collection efficiency is 82 percent, which is only about P450 million, they should improve it. I think we don’t need it (credit guarantee) if the collection is efficient,” Rosal said on Wednesday.
Based on a NEA audit report presented by Aleco in the assembly on Sept. 3, Apec spent over P40 million for administrative and general expenditures in 2020.
“The administrative and general expenses represent 5 percent of the nonpower cost which includes the professional fees,” the report said.
The Aleco report said almost all Apec operations, such as line clearing, collections, tellering, general and office services, payroll, timekeeping and other services, were contracted and outsourced.
Rosal said Apec’s move was a “retaliation” on the decision of Aleco’s members-consumers to terminate the concession agreement.
“Since they are still there, they have to do their thing,” the governor said.
Apec, Alvarez said, is seeking the reimbursement of P5.1 billion in investments and accounts payable to power suppliers.