EDITORIAL - OUR in need of its own fix

The Office of Utilities Regulation (OUR) has announced that it is about to commission an operational audit of the Jamaica Public Service Company (JPS) in preparation of the five-yearly review of tariffs for the light and power company.

This process is important in several respects, not least that it will likely open a new front in the ongoing debate over the cost of electricity in Jamaica and the pace - too slowly for most people - at which we are bringing on new, more efficient power-generating systems.

Indeed, we all know that at around US$0.42 per kilowatt-hour, electricity is an expensive commodity in Jamaica that weighs heavily on the cost of doing business and, ultimately, the competitiveness of the island's economy. So, what happens in this review will be watched closely.

Indeed, it will be the first major undertaking by the OUR, for which Albert Gordon, the agency's still-new director general, can be attributed full responsibility. He came in late on the bid for the 360-megawatt liquefied natural gas-fired power plant.

In the three months he has held the job, Mr Gordon has not been inclined to make public pronouncements. He remains, largely, an unknown quantity. The public knows little, or less, about his vision for the OUR.

The JPS's tariff review, however, may be an opportunity for him to signal how he intends to shape the OUR and the kind of regulator he wants it to become. The operational audit of JPS follows closely one on the OUR itself by the Government's Auditor General's Department.

The findings by Pamela Monroe Ellis' staff were hardly flattering of the utilities regulator, including in its monitoring of the light and power company. The OUR's approach, they reported, was largely reactive rather than proactive.

For instance, for both JPS and the water provider, the National Water Commission (NWC), the OUR established service-delivery standards and performance criteria, and there are schemes to compensate consumers when these standards are breached. The problem is that the OUR has no specific penalties for failure to meet the criteria, and the leverage it had, the naming and shaming of breachers, it stopped doing.

compensation

The result: Between 2008 and 2012, JPS and NWC, consumers were entitled to J$223.9 million in compensation for breaches, but for which they would have to make claims, and another $709.1 million should have been automatically credited to customers' accounts. With regard to the former, the claims were only $206,000, or 0.09 per cent of the entitlements. For the latter, their customers were credited under $60 million, or eight per cent of what was owed. In other words, the schemes were not meeting their objectives.

The OUR's approach of waiting on the utility companies to file reports, rather than probing for information, allowed the NWC, for a long period, to use a surcharge it levies on consumers from capital projects to recurrent spending. The OUR only found out 16 months after the breach took place.

These and other shortcomings raise questions not only about the OUR's efficiency, but in whose interests it operates. How Mr Gordon answers, and more important, if he can mend the organisation, will shape his legacy.

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