ALECO’s Second Chance: Can Reprivatization Finally Deliver?
- October 16, 2026
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Recent developments have underscored the Albay Electric Cooperative’s (ALECO) deepening woes, reinforcing its long-standing reputation as one of the country’s most troubled electric cooperatives (ECs).
The spotlight turned to ALECO during the review of system losses following President Ferdinand Marcos Jr.’s July 2026 State of the Nation Address (SONA), in which he called for the elimination of system loss charges.
Data from the Energy Regulatory Commission (ERC) showed that the combined operations of Albay Electric Cooperative Inc. (ALECO) and Albay Power and Energy Corp. (APEC) recorded a system loss of 21.5% in 2025, placing them among the ECs with the highest losses nationwide.
Additionally, persistent power outages across Albay have intensified calls to reprivatize ALECO. Municipal mayors, during a meeting of the League of Municipalities of the Philippines (LMP)–Albay Chapter, demanded an end to the weekly interruptions, which the EC promised to resolve by the end of October 2026.
Camalig Mayor Caly Baldo said local officials would once again lodge a complaint against the cooperative “if the power service does not improve or change” after October.
Another pressing issue is ALECO’s ₱5.7-billion debt, which Albay Governor Noel Rosal has cited as grounds for demanding immediate structural reforms in the cooperative’s management.
“The provincial government of Albay assures everyone that its position on the matter has not changed: the decision on how to rehabilitate and strengthen ALECO’s management and operation shall be left to its member-consumers who stand to be directly benefited or injured ultimately,” stated Rosal.
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The Prospect of Reprivatization
Calls to reprivatize ALECO gained traction in 2025 as lawmakers explored a private takeover amid mounting concerns over high system losses, rising electricity rates, and growing debt. The Manila Electric Company (Meralco) also expressed interest in a possible investment in the EC, which serves about 1.3 million consumers in three cities and 15 municipalities across Albay.
Meralco senior vice president Arnel Casanova said Albay local government officials had raised concerns that unreliable electricity was discouraging businesses from investing in their municipalities, potentially hampering local economic growth.
A Meralco takeover could bring fresh investments to modernize ALECO’s infrastructure, from upgrading power lines to deploying smart systems and grid technologies.
In 2025, Albay 2nd District Representative Caloy Loria also confirmed that initial talks with Meralco had taken place, with further discussions expected to help determine the next steps. He stressed, however, that resolving ALECO’s outstanding debts remained the top priority.
“There will be a round of talks first, and Meralco will study it well. But they are very interested in operating the entire province of Albay,” he explained.
Loria then filed House Resolution No. 108, urging the Committee on Energy to investigate ALECO’s operational shortcomings and recurring power interruptions.
ALECO’s Previous Privatization
In 2014, ALECO signed a 25-year concession agreement with Albay Power and Energy Corporation (APEC), a San Miguel Corporation subsidiary, transferring management of the debt-ridden cooperative to private hands. At the time, ALECO owed creditors nearly ₱4 billion. Backed by top provincial officials, the deal was presented as a way to address the cooperative’s longstanding financial and operational problems.
However, APEC’s tenure was marked by worsening performance indicators. System losses reportedly surged to 40%, collection efficiency fell below 50%, and electricity rates climbed to ₱18 per kilowatt-hour, while ALECO’s debts continued to mount. An audit by the National Electrification Administration (NEA) also found that APEC had failed to meet most of its major obligations and deliverables under the concession agreement.
“When ALECO was privatized, we saw that it changed nothing and the debt even ballooned,” stressed the Philippine Movement for Climate Justice (PMCJ) senior energy program officer Larry Pascua.
The arrangement came to an end in November 2022, when ALECO and APEC terminated their concession agreement amid persistent operational problems, mounting debts to power suppliers, and service deficiencies. Distribution operations were formally returned to ALECO under the supervisory management of the National Electrification Administration (NEA).
Following NEA’s takeover, electricity rates reportedly fell sharply, from ₱18 to ₱13 per kilowatt-hour.
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Rehabilitation or Reprivatization?
Despite returning to cooperative management, ALECO has continued to lag behind its peers in the Bicol region. In the NEA’s 2024 performance assessment, it remained in the “red” category, marking its eighth consecutive year classified as an ailing EC since public ratings began in 2016.
Rather than pursuing reprivatization, some advocacy groups are now calling for a comprehensive overhaul of ALECO’s aging infrastructure, from its power lines and substations to other critical facilities.
“There’s a great and urgent need to rehabilitate ALECO’s dilapidated facilities, which are causing these issues,” pointed out Pascua. “The rehabilitation should also be followed by new and cleaner sources of energy that can increase the efficiency and reliability of energy services in Albay.”
During an October 7, 2026 hearing, the Albay power and energy committee sought updates on ALECO’s financial records and the progress of its modernization and rehabilitation projects, which carry a combined budget of ₱1.2 billion.
This was because in 2025, ALECO received ₱367 million in national government funding to rehabilitate distribution lines and substations across Albay, followed by an additional ₱500-million subsidy from NEA under the General Appropriations Act, secured through the initiative of the Ako Bicol Party-list to build new substations.
According to ALECO operations head Mark Lucilo, the ₱367-million first phase of substation rehabilitation works in Daraga and Ligao City is nearing completion, with both projects targeted for completion by the end of 2026.
As to the frequent outages raised by local officials and consumers, ALECO attributed recent interruptions to ongoing infrastructure upgrades. In an recent statement, the cooperative said temporary power shutdowns were necessary to ensure public and worker safety during the upgrades, which it expects to improve reliability, regulate voltage, and meet rising demand.
“These projects should be finished by the end of October, but sometimes factors arise that cause extensions. However, we are 100% sure that phase 1 construction of the substation, which costs P367 million, will be completed within 2026,” explained Lucilo.
For Legazpi City resident Jeric Azores, the more than ₱867 million in government assistance poured into ALECO since 2025 has yet to translate into relief for consumers grappling with repeated blackouts and steep power bills.
“Our bill nearly doubled despite persistent power interruptions,” he lamented. “It’s deeply frustrating because, on top of disrupting our daily household routines and business transactions, we are paying significantly more for electricity while Albay’s power services remain completely unreliable.”
While ALECO’s persistent problems have bolstered calls for privatization, the Partners for Affordable and Reliable Energy (PARE), a Philippine consumer advocacy group, urged the Department of Energy (DOE), NEA, ERC, and Congress to see the rehabilitation program through and subject it to independent assessment. PARE also called for meaningful governance reforms, greater consumer participation, and full transparency throughout the process.
“Privatization did not solve the problem the first time. Consumers were the ones who paid the price. Before anyone rushes to that conclusion again, every available reform measure must first be exhausted,” highlighted PARE.
For Baldo, ALECO’s future remains uncertain, with its performance under scrutiny to determine whether its promised improvements will materialize.
“We will continue to support the cooperative and extend help to ALECO, but we also need to stand firm for a more reliable, faster, and better electricity service for our fellow citizens,” he declared.
ALECO’s years of underperformance raise the question of how many more chances the cooperative should be given. Rehabilitation remains necessary, but it cannot justify an indefinite wait for better service. With hundreds of millions of pesos already committed to modernization, ALECO must demonstrate measurable improvements within a firm timeline—or authorities should seriously pursue reprivatization.
Privatization is no guarantee of success, but it deserves serious consideration. ALECO has had opportunities to recover, and consumers should not have to bear the cost of continued underperformance indefinitely. If rehabilitation efforts fail to deliver meaningful improvements within a clear timeline, authorities must be prepared to reconsider reprivatization alongside other reforms, with consumer welfare, accountability, and reliable electricity service as the foremost priorities.
Sources:
https://tribune.net.ph/2026/08/13/albay-co-ops-top-system-loss-list
https://www.rappler.com/philippines/luzon/will-aleco-reprivatization-worsen-albay-power-woes-groups
https://mindanaodailynews.com/aleco-privatization-should-be-last-resort-not-first-option/
