EDITORIAL - PAAC must have hearing on OUR report

Now that the internal affairs of the Jamaica Labour Party (JLP) appear to be largely settled and he is back on the Opposition's front benches, we hope that Ed Bartlett will find time to give serious attention to his role as chairman of the House's Public Administration and Appropriations Committee (PAAC).

For there are a number of issues worthy of the attention of the committee, none, in our view, more urgent than the report of an audit of the Office of Utilities Regulation (OUR), conducted by the Auditor General's Department, and which we commented on last week.

For example, the Auditor General's Department harbours concerns about the tenure of persons so far appointed to head the OUR and how contracts, at the shorter end of the allowable spectrum, might weaken the resolve with which they rebuff attempted political encroachment.

But more critical in our view is the seeming absence of robustness with which the OUR perceives and pursues its job as utility regulator, which could lead to a misapprehension as to whom it should be accountable.

As we understand it, the OUR's primary job is to ensure that consumers get a fair deal from utility companies, which, because of the services they offer, operate primarily in monopolistic or oligopolistic markets, or have complex pricing mechanisms. Regulators, in the circumstance, have to be extremely vigilant.

It turns out, based on the Auditor General's Department's findings, our regulator is reactive rather than proactive, waiting on utility companies to send it reports rather than "physical surveillance" to determine breaches of established operating standards.

Take, for example, the case of the National Water Commission (NWC), which is allowed to apply a surcharge to its customers' bills, with the earnings going to capital projects. At one time, the NWC used that cash to finance its recurrent costs. The OUR found out 16 months after the fact, when the NWC filed its accounts.

Nor does it appear that the OUR's guaranteed-standards scheme, with its absence of penalties, is an incentive to good behaviour by the utilities. It used to be the case that the public was told how the NWC and the Jamaica Public Service Company (JPS), the light and power company, performed against their service standards. The OUR stopped telling.

rogue utilities?

We do not know if there is correlation and causation between that decision and the following facts:

Compensation for breaches of performance standards are in two categories - those for which customers have to apply, and those for which rebates are automatically credited to their accounts.

The Auditor General's Department found that between 2008 and 2012, there was claimable compensation worth J$220.25 million at the NWC, of which consumers claimed a minuscule 0.09 per cent. With regard to the JPS, claimable compensation was potentially J$709 million. Customers claimed on $60 million, or eight per cent.

We suspect that the almost impenetrable bureaucracy to which consumers are subjected limits their applications for compensation. Nor does it seem that the companies easily let go of automatic rebates.

Said the Auditor General's Department report: "The low level of claims has not acted as an effective drive of efficient performance for these utilities providers to improve service delivery and adhere to required standards."

In Albert Gordon, the OUR has a new boss who should be about reform. Mr Shaw's committee must question him about his intentions.

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