Legaspi Oil Co. hails NEA takeover of Aleco

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TUESDAY, 15 FEBRUARY 2011 19:23 JENNIFER A. NG / REPORTER

THE decision of the National Electrification Administration (NEA) to take over the operations of the Albay Electric Cooperative (Aleco) will ensure the steady supply of electricity to households in Albay and the continuous operation of Legaspi Oil Co. Inc. (LegOil).

LegOil president Jesus L. Arranza welcomed NEA’s move and hailed Energy Secretary Jose Rene Almendras for initiating the takeover.

“Thousands of power consumers in the whole of Albay, big or small, especially the ordinary household, will continue to be supplied with electricity,” said Arranza in a statement.

He said that power consumers including manufacturers and producers in the area were very much concerned when the National Grid Corp. of the Philippines (NGCP) announced that it will be cutting-off the supply of electricity to Aleco.

Aleco is the exclusive franchise holder and distributor of electricity in Albay province and purchases its power requirements through the Luzon grid.

It was explained that private generators of electricity in Luzon transmit the electricity they produce to various distribution utilities and former National Power Corp. direct-connect customers (consumers with big loads) through the Luzon grid that is in now being operated by the NGCP.

“The disconnection notice made by the NGCP was in implementation of Department of Energy Circular DC2010-05-006 that requires the NGCP to disconnect a delinquent distributor or franchise holder that fails to timely pay electricity purchased through the grid,” said Arranza.

Arranza, who is an independent director representing the consumer sector of the Philippine Electricity Market Corp. (PEMC) pointed out that because of the “gross mismanagement” of Aleco, the utility’s unpaid obligations to PEMC had reached a staggering P1.134 billion as of Jan. 15, 2011. He said that Aleco was given up to early February to settle its debt.

He explained that PEMC acts as a clearing house for all generators who participate in the wholesale electricity market (WESM) where PEMC merely collects the cost of electricity purchased by a distributing utility from the system or the Luzon grid. PEMC in turn remits its collection to the generator who had actually supplied the electricity, he said.

Arranza said that “because of the NEA take-over, LegOil will continue to operate and in the process accommodate the daily deliveries of copra from thousands of coconut farmers in the Bicol region including Masbate.”

The production of copra is the main livelihood of coconut farmers in Bicol and if LegOil suspends its operations because of lack of power, LegOil’s purchases of copra feedstock from coconut farmers will surely come to a halt, Arranza added.

Earlier, in a letter dated Aug. 4, 2010, Arranza had requested Almendras to direct the NEA to immediately take over Aleco’s operations to ensure continued power supply to consumers.

Under the Electric Power Industry Reform Act, the Energy Secretary sits as ex-officio chairman of the NEA board of administrators. The NEA in turn has visitorial and enforcement powers over electric cooperatives in the country.