EDITORIAL - Waffling, obfuscatory OUR

We expect that when a government regulatory agency speaks, it will be clear and precise, providing utilities with explicit directions and consumers with information that is easily understood and specific.

That, unfortunately, we can't claim to be the case with the Office of Utilities Regulation (OUR), the agency that polices Jamaica's light and power sector, including the Jamaica Public Service Company (JPS), the electricity company that has a monopoly on the transmission and distribution of power on the national grid.

At best, the OUR's latest statement on the actions of JPS is obfuscatory; at worse, it's an almost inscrutable waffle.

Under the JPS licence, the cost of fuel is a specific pass-through charge on its bills, which it recoups, in arrears, each month from consumers. So the fuel costs fluctuate, depending on the price of oil, the fuel that JPS uses to generate most of its electricity.

The price of oil is now high, tipping past US$100 per barrel. Moreover, JPS, with mostly old, inefficient generating plants, is an expensive producer of electricity. Jamaicans pay in the region of US$0.30 per kilowatt-hour for electricity, which is high.

yearly tariff hikes

Another element of JPS's operating licence qualifies for tariff hikes each year based on inflation, using a mix of price movements in the domestic market and those from which it makes the bulk of its purchases. The company recently applied for that tariff hike of more than two per cent, based on this formula.

The upward spiral in the fuel component of bills, plus the company's demand for the inflation-based adjustment of its tariff have, in recent times, made JPS even less popular with its customers.

It was not surprising, therefore, that the company sought to employ a bit of public relations. Last week, it announced that it would defer a portion of its pass-through cost for fuel on bills issued in May.

"The full fuel charge would have sent bills up by about 10 per cent this month," said CEO Damian Obiglio. "However, because we are passing on only a portion of the increase at this time, customers' bills will go up by 4.35 per cent."

no debt forgiveness

The point to note - this is not a forgiveness of the debt. The 5.65 percentage points of the bill that have been deferred, on the face of it, remain an obligation.

Here is where the OUR comes in.

It has warned that there could be "adverse consequences for customers, as there is uncertainty in the movement in oil prices".

The regulator has raised questions such as what would happen if the price of oil continues to rise when would JPS seek to collect? And, the fact that consumers could suffer "a rate shock" if the debt was demanded with oil prices on an upward trend. Moreover, consumers would not see "the consequent reduction in fuel rates" should the JPS decide to collect if and when "oil prices subsequently decline".

But the OUR made no order or recommendation to JPS. Nor does it provide consumers any information on their rights, or obligations.

For instance, consumers who want to settle their obligations right now should be allowed to do so if the JPS is obliged to accept payment.

And if JPS unilaterally defers a charge, thereby altering a contract, why should anyone be under an obligation to pay later?

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.