Albay may grow dark on ALECO's unpaid power bills

Albay province is faced with the prospect of plunging into darkness after the Philippine Electricity Market Corp. (PEMC) ordered the disconnection of its electric cooperative from the wholesale electricity spot market for allegedly not paying nearly P1 billion in power supply bills. Philippine Electricity, operator of the spot market where electricity is bought and sold, claimed that Albay Electric Cooperative (ALECO) owes PEMC P975.72 million. PEMC also claimed in a statement Tuesday the cooperative failed to settle its obligations despite agreeing to do so in a mediated agreement on Dec. 9, 2010. As such, PEMC “is constrained to issue a notice of suspension and request for the electric cooperative’s disconnection." ALECO supposedly agreed to settle its December 2010 obligations as well as replenish its prudential requirement or security deposit by Jan. 25, according to Philippine Electricity. The cooperative supposedly agreed to pay its August 2010-November 2010 obligations Feb. 1 to make its WESM bills current. By not settling its obligations, ALECO supposedly violated WESM rules on payment defaults and margin calls, PEMC said. From June 2009 to April 2010, ALECO bought 100 percent of its power needs from the WESM, and up to 65 percent of its requirement until December 2010. PEMC alleged that the cooperative had been remiss in its obligations since May 2010 that the spot market administrator decided to draw from ALECO’s prudential requirement to settle some of its rising arrears. Philippine Electricity also asked the National Grid Corporation of the Philippines to disconnect the cooperative from its transmission lines. But National Grid officials have acted on that request because of “procedural requirements" that have yet to be accomplished. With its obligations unsettled, ALECO will not be able to buy power from the spot market. The cooperative and turn around the situation by paying its outstanding accounts and replenishing its prudential requirement, PEMC said. The electricity spot market was created in 2001, based on the premise that the cost of electricity can go down as suppliers compete within the framework of organized trading and market forces — demand and supply sides — dictate prices. It started commercial operations in Luzon in June 2006, and only last December in the Visayas. — VS, GMANews.TV