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Republic of the Philippines HOUSE OF REPRESENTATIVES Quezon City FIFTEENTH CONGRESS First Regular Session HOUSE RESOLUTION No.

545 _______________________________________________________________________ Introduced by Reps. TEDDY A. CASIO and NERI JAVIER COLMENARES _______________________________________________________________________ RESOLUTION DIRECTING THE COMMITTEE ON ENERGY TO CONDUCT AN INVESTIGATION, IN AID OF LEGISLATION, INTO THE VARIOUS ANOMALIES SURROUNDING THE ALBAY ELECTRIC COOPERATIVE (ALECO) THAT HAS ENDANGERED THE INTERESTS OF CONSUMERS IN THE PROVINCE WITH THE PROPOSAL OF A P1.66 PER KILOWATT HOUR HIKE IN ELECTRICITY RATES WHEREAS, the Albay Electric Cooperative (Aleco) is the first electric cooperative organized in the Bicol region in 1972 for the primary purpose of undertaking power generation, utilizing renewable energy sources, acquisition and operation of sub-transmission or distribution of electricity services to its household members; WHEREAS, Aleco is currently saddled with an outstanding P982 million debt to the Philippine Electricity Market Corp (PEMC), along with more debts from the Power Sector Assets and Liabilities corporation (PSALM) of P1.7 billion and the National Electrification Administration (NEA) of P180 million; WHEREAS, due to these outstanding debts, Aleco is now allegedly the worst performing electric cooperative in the country as it has endangered the interests of its 200,000 memberconsumers with its officials alleged culture of abuse, corruption and gross mismanagement that has brought it to the brink of bankruptcy; WHEREAS, the provincial government of Albay shocked 200,000 Aleco memberconsumers with its recommendation for an additional P1.66 per kilowatt hour (kWh) increase in an effort to solve the financial woes of the cooperative after it received a notice for disconnection last September 12, 2010 owing to its unpaid debts to the PEMC equivalent to 36 monthly installments. Aleco currently charges its consumers P8.56 per kWh; WHEREAS, the rate hike recommendation is vigorously opposed by the people as expressed by the Albay Consumer Watch, Bayan Muna and the Catholic Social Action Center;

WHEREAS, Aleco has thrice been under the direct management of National Electrification Administration (NEA) for more than a decade that ended in 2006. In 2008, Aleco forged another operation and maintenance (O & M) contract with the National Power Corp (NAPOCOR) for one year upon recommendation of Albay Gov. Joey Salceda to then President Gloria Macapagal-Arroyo in his bid to save the ailing cooperative; WHEREAS, Aleco was categorized as an effective electricity distribution facility in the 1972-1994 period. The cooperatives debts started ballooning in 1994 when under NEA management, Aleco I, II and III were merged into one operation; WHEREAS, the Aleco under current general manager Alex Realoza has standing debts of more than P2 billion and assets of only P500 million. This situation is brought about by the current and former management teams of the cooperative that is characterized by abuse of discretionary functions, massive irregularities in numerous transactions, years of mismanagement, and abuses against Aleco employees and consumers, among others; WHEREAS, the Department of Energy (DOE) has stepped into the dispute between the Aleco and the Philippine Electricity Market Corp. (PEMC), operator of the wholesale electricity spot market (WESM), to keep Albay from experiencing massive power outages due to various irregularities in the cooperative; WHEREAS, it is the duty of Congress, as part of its oversight functions, to protect the consumers from the sins and abuses of company owners and managers; WHEREAS, Congress also needs to determine the effectiveness of current laws governing electric cooperatives, including Presidential Decree No. 269 (Creating the National Electrification Administration), the Electric Power Industry Reform Act of 2001 (R.A. 9136) and the Philippine Cooperative Code of 2008 (R. A. 9520) to address these and similar situations assailing electric service cooperatives in the country; NOW THEREFORE BE IT RESOLVED, that the Committee on Energy conduct an investigation, in aid of legislation, into the various anomalies surrounding the Albay Electric Cooperative (ALECO) that has endangered the interests of consumers in the province with the proposal of a P1.66 per kilowatt hour hike in electricity rates. Adopted,

TEDDY A. CASIO Bayan Muna Party-list

NERI JAVIER COLMENARES Bayan Muna Party-list