Albay Electric Cooperative, Inc. (ALECO) is gearing up to manage again the power distribution in the province after its member-consumer-owners (MCOs) voted to terminate the Concession Agreement between ALECO and SMC Global Power Holdings, Inc., the owner of Albay Power and Energy Corporation (APEC).

The reverting of operations from APEC to ALECO will happen circa first quarter next year based on the ALECO Board Resolution No. 58 which unanimously invoked the Default Provision under Section 21.1.1 of the CA.

"The ALECO shall not takeover of the usual operations until the exhaustion of the period as required by the said clause which should not be later than February 25, 2023, being the timeline set in view of the preparations and groundworks that shall be arranged by ALECO," the resolution reads.

Pending takeover, the APEC shall continue to perform the terms of the Concession Agreement in order not to disrupt the services that ought to be given both by APEC and ALECO to the MCOs.

Moreover, ALECO invoked the supervisory power of the National Electrification Administration (NEA) of Presidential Decree No. 269, as amended by Republic Act No. 10531 in order that the required preparations and groundworks may now be commenced to assist ALECO in the transition until it becomes financially and technically viable to manage its operations.

On 03 September 2022, ALECO conducted a Special General Membership Assembly where MCOs were apprised regarding the audit findings of NEA on APEC.

Based on the audit which was conducted last March 2021, there are deficiencies in the performance of APEC as a concessionaire of ALECO. The audit reveals that the system loss remained well above the System Loss Cap set by the Energy Regulatory Commission (ERC) which resulted in huge subsidized costs thereby negatively affecting its financial viability. Also, the collection efficiency remained well below the standard set by NEA and the audit further reveals that with the financial status of APEC, it showed no sufficient cash to pay its maturing obligations.

ALECO said that APEC has not satisfied the majority of the major requirements and deliverables under the Concession Agreement, as reflected in the Monitoring Report of ALECO and as noted by the audit team of NEA.

In view of this, MCOs were given two options for the recovery of the ALECO, (1) the termination of the Concession Agreement and the eventual reverting of the operations and management to ALECO or (2) the Amendment of the Concession Agreement and Termination of MANTEX Group in APEC.

The MCOs unanimously voted to terminate the agreement and this decision was adopted by the ALECO Board of Directors. ###