Based on previous experiment result, an assumption is made to explain the abnormal head degradation in the first stage of an electrical submersible pump (ESP): the bubbles' breaking up and coalescence effect with compressibility is the main reason of this phenomenon. To investigate the head degradation problem inside the ESP, a series of numerical simulations are performed on the first stage of the split-vane impeller pump commonly employed for gas handling purpose. These three-dimensional transient Eulerian multiphase simulations are divided into two groups: one group with the traditional fixed bubble size method and the other with the ANSYS population balancing model (PBM) allowing the bubbles to break up and coalesce. The simulation result with the changing bubble size matches well with the experiment data, which supports the previous assumption. The flow field based on PBM simulation is visualized and analyzed. Also the separation of phases is discovered with large volume of gas accumulating at the suction side of the impeller trailing blades, which is also supported by experimental observation.