ALECO shares many of CENECO‘s governance problems. First, its electricity tariff is too low to cover costs even if systems losses are reduced and collection efficiency improved, as the ALECO management never applied to the ERC for an increase in the tariff between 2003 and 2008, in large part due to the Board‘s fear that a tariff increase would have negative electoral ramifications. Second, its collection efficiency is low because of sustained inaction against nonpaying and politically protected consumers, most notably the Barangay Power Associations (BAPAs) which are major delinquents but successfully lobby municipal mayors to intervene whenever ALECO issues them disconnection notices. Third, the EC‘s high systems losses have a big non-technical component, primarily pilferage (while these are not measured separately, officials stated that they account for roughly **Figure 4: Employment trends and board elections** half of the losses), which in turn results **in ALECO** from collusion between consumers and **Number of Employees** ALECO linemen. Fourth, patronage-based 650 employment has been a constant feature, in Election year particular of contract staff whose six month 600 terms are repeatedly renewed or who are regularized. While ALECO‘s consumer-to550 employee ratio of 325 is in line with the national average, this does not take into 500 account staff on contract — who are not considered employees — who number 450 about 100. It is also interesting to note that there was a surge in employees prior to the 400 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 board elections of 2007 and 2001 (Figure 4), _Source_ : NEA again indicative of this phenomenon of patronage. Finally, and most significantly, are the alleged cases of procurement fraud that have been reported in the local press, such as over-invoicing for transformers,<sup>12</sup> and the delivery of equipment even before the bidding process was completed, resulting in equipment that did not conform to the technical specifications.

The EC has been characterized by considerable involvement of the governor and congressman in EC management. ALECO scores very high on the variable ̳rent-seeking potential‘ as it is the only EC supplying the province of Albay, a regional center of the Bicol region with a population of 1.19 million. ALECO‘s catchment area covers 15 municipalities and 3 cities. Given ALECO‘s province-wide reach, this is a case where the governor, by our definition, is also considered a local politician. The fact that Albay is also in a typhoon prone area and therefore a regular recipient of reconstruction and rehabilitation funding from the national government has also increased its rent-seeking potential and generated considerable political interest in its affairs by the governor, congressmen, and, to a lesser extent, mayors. Under the Bicol Calamity Assistance for Rehabilitation (CARE) funds the province received P770 million (out of a national allocation of P9 billion), of which P220 million were for the rehabilitation and/or replacement of dilapidated electric facilities to be administered by NEA and the provincial government, a considerable avenue for patronage and rent-seeking. The governor, and to a lesser extent, the congressmen have also regularly intervened on behalf of ALECO every time the NPC threatened to cut power on account of ALECO‘s debts.

ALECO, unlike CENECO, also scores highly on the variable, ̳salience of EC catchment area for national politicians‘. As a regional center, Albay is a politically important province, as it has access to the means of transportation and communication crucial in election campaigns and in 12 The Bicol Chronicle, September 11, 2004 19