Albay Electric Cooperative: Why It’s Among the PH’s Most Troubled ECs

September 11, 2025

Home to the iconic Mayon Volcano, Albay has a population of about 1.38 million, making it the second most populated province in the Bicol region, next to Camarines Sur.

In 2023, Albay’s economy was driven largely by the services sector. According to the Philippine Statistics Authority (PSA), services accounted for more than half of the province’s economic output, led by transportation and storage, accommodation and food services, and other service activities, each posting double-digit growth. This reflected Albay’s expanding role as a regional hub for logistics and tourism, with visitors drawn to its natural landmarks and hospitality sector.

In 2024, Albay emerged as the most visited province in the Bicol region, drawing about 1.39 million domestic tourists and over 16,000 foreign visitors. Supporting this steady rebound is a robust tourism infrastructure. Legazpi City alone boasts 37 Department of Tourism (DOT)-accredited hotels and 13 resorts, providing visitors with a wide range of accommodations and services.

Despite this promising outlook, Albay’s economy expanded at a slower pace in 2023, posting 5.9% growth compared to 6.8% the year before, with its GDP rising from ₱145.12 billion to ₱153.73 billion.

For Albay to sustain consistent growth, a dependable energy supply is crucial—yet this remains a major challenge for the province.

(Also read: 10 Insights from the Philippine Energy Report Q2 2025 Report)

Aleco’s issues

As of June 30, the Albay Electric Cooperative’s (Aleco) arrears in the Wholesale Electricity Spot Market (WESM) had ballooned to over ₱656 million, while its total liabilities reached about ₱9.9 billion. These debts reflect long-standing problems that have plagued the cooperative for years.

Key challenges include:

High system losses

System losses, both technical and non-technical, such as pilferage, remain high. In a provincial forum, Aleco reported losses of 23.45% as of April 2025 and outlined a loss-reduction program. These levels are still well above the regulatory caps set for distribution utilities.

Low performance rating

Aleco has consistently underperformed compared to its peers in the Bicol region. In the 2024 performance assessment, Aleco remained in the “red” category, classified as an “ailing” cooperative for eight years straight since NEA’s public rating records began in 2016.

Privatization & labor disputes

In 2013, San Miguel Corporation (SMC) stepped in to manage the debt-laden Albay Electric Cooperative (Aleco) through its subsidiary, Albay Power and Energy Corporation (APEC). The 35-year concession agreement saw SMC commit a minimum of ₱250 million to settle debts and rehabilitate infrastructure.

Two years after the takeover, inefficiencies persisted. Billing delays, missing statements, and collection rates below 50% plagued APEC, which struggled with a sabotaged database and incomplete records. Coupled with boycotts, labor unrest, and mounting unpaid bills, Aleco remained trapped by legacy woes and weak institutional capacity.

By 2022, the struggles had not eased. NEA confirmed that APEC’s concession to operate Aleco had been revoked, with NEA resuming supervision of the cooperative. Officials cited APEC’s inability to meet financial and operational targets, while consumer groups continued to press for accountability over years of unreliable service and unresolved debts.

(Also read: What’s Holding Back Foreign Investors in Renewable Energy?)

Frequent & prolonged outages

While Aleco insists outages stem from maintenance, the frequency and duration of service disruptions suggest deeper systemic issues. In March 2025, Aleco announced a sweeping 48-hour blackout to conduct emergency repairs on damaged equipment—an unusually prolonged interruption impacting dozens of barangays in Legazpi City.

In July, a 12-hour brownout targeted areas serviced by the Polangui substation to facilitate preventive testing and line clearing. GMA News reported that on July 29, 2025, Albay residents endured a barrage of outages, with ALECO logging 11 separate power interruptions across seven substations in just a single day.

In 2022, ALECO was reported to have the highest System Average Interruption Frequency Index (SAIFI) among Luzon ECs at 53.38. This means that, on average, each customer experienced more than fifty sustained power outages during the year.

Billions poured into struggling ECs

Each year, billions of public funds flow to rural ECs through NEA. In 2025, Congress earmarked more than ₱5 billion for subsidies, including ₱3.6 billion for the Sitio Electrification Program and line rehabilitation. These funds are classified as grants rather than loans, which means ECs are not required to pay them back and only need to account for how the money was spent.

The flow of support has not slowed. NEA extended about ₱1.8 billion in loans to 36 ECs in 2024, up from ₱1 billion the year before, much of it for infrastructure upgrades. Additional loans covered working capital needs and calamity rehabilitation.

Still, critics question whether these bailouts deliver value. Columnist Bienvenido Oplas Jr. argued that NEA perpetuates inefficiency by shielding poorly performing cooperatives from market discipline. He points out that despite receiving billions in subsidies since 2020, many ECs continue to post high system losses and deliver erratic service.

“The NEA is a political institution that gives political patronage to ECs, which are allowed to incur system losses of up to 12% which are passed on to the consumers, while private distribution utilities (DUs) are capped at 6% in system losses,” Oplas wrote. “That 6% difference between the two could be hundreds of billions of pesos yearly in additional payments by consumers in the provinces.”

In the case of Aleco, House Bill 4017 was filed in August 2025, seeking a special debt restructuring program for the cooperative and other “distressed” ECs.

The measure warns that without intervention, Aleco’s debts will eventually fall on consumers through higher electricity rates or even blackouts. To address this, it proposes a ₱3-billion refinancing program under the National Electrification Administration (NEA), designed to spread out payments, cut financing costs, and push reforms in troubled ECs.

Key provisions include a one-time tax amnesty on arrears, Energy Regulatory Commission (ERC)-approved recovery charges with caps to prevent bill shocks, and a governance covenant with NEA. Unlike the Electric Power Industry Reform Act (EPIRA), which wrote off debts, the scheme requires full repayment of obligations.

However, this approach still leans on taxpayer support while sidestepping the entrenched inefficiencies that have plagued many ECs for decades. For policymakers, this raises questions about accountability and the true cost of propping up weak institutions. For consumers, it means shouldering the weight of unreliable service when what they deserve is affordable and dependable electricity.

What Aleco must fix — and fast

For Aleco’s users, the struggle is personal and pressing. Take Ligao City student Joshua Ducante, who frequently sits through online classes disrupted by both power and signal outages. “We often lose signal and power at the same time,” he shared, stressing that critical repairs and upgrades are overdue.

Meanwhile, the public hospital in Pio Duran relies on aging generators during low-voltage periods, underscoring how unstable electricity threatens even basic healthcare delivery.

This isn’t just a local inconvenience; it’s a broader development risk. A 2023 study by the Philippine Institute for Development Studies (PIDS) estimates that a five-hour blackout can cost the Philippine economy roughly ₱556 million in lost productivity and business activity. Reliable energy services are foundational not only to education and medicine but also to economic stability and growth.

In Aleco’s case, reform must go beyond fresh lifelines like House Bill 4017’s ₱3-billion refinancing plan. The real solution lies in transforming structures, management, and culture. Only then can Albay’s residents finally expect, and deserve, consistent, affordable, and dignified electricity service.

Sources:

https://psa.gov.ph/content/highlights-region-v-bicol-region-population-2024-census-population-2024-popcen

https://rsso05.psa.gov.ph/content/albays-economy-records-59-percent-growth-2023

https://pia.gov.ph/albay-most-visited-spot-in-bicol-in-2024

https://en.wikipedia.org/wiki/Legazpi%2C_Albay

https://docs.congress.hrep.online/legisdocs/basic_20/HB04017.pdf

https://www.facebook.com/pioalbay2023/posts/IN-PHOTOS-the-albay-electric-cooperative-inc-aleco-spearheaded-a-system-loss-red/720476160770556

https://www.gmanetwork.com/regionaltv/news/109448/pbbm-vows-to-energize-more-homes-as-bicol-battles-nearly-decadelong-problem/story

https://www.philstar.com/business/2013/10/28/1250152/san-miguel-takes-over-aleco

https://businessmirror.com.ph/2016/03/27/smc-power-in-albay-still-reeling-from-inherited-problems

https://www.philstar.com/business/2022/10/05/2214275/aleco-take-over-albay-power-distribution

https://www.pna.gov.ph/articles/1246376