Sun | Dec 4, 2016

OUR guilty of no wrong

Published:Friday | January 30, 2015 | 12:00 AM

We write in response to the subject of your editorial in The Sunday Gleaner of January 18, 2015, headlined 'Review mechanism needed at the OUR', critiquing the Office of Utilities Regulation's (OUR) recent determination notice on the Jamaica Public Service Company Limited's (JPS) tariff application.

Notably, your editorial comes against the background, and in support of, the Private Sector of Jamaica's recent expression of 'grave' disappointment with aspects of the organisation's rulings in the said determination notice.

You highlight in your editorial the need for the evolution of systems for administrative reviews of regulatory decisions to obviate the need for first resort to the courts and point to what we understand you deem to be a best-practice example of same in the Commonwealth jurisdiction of Australia.

Fortunately, there is no need to either await the evolutionary process or to journey to Down Under to find such systems, as the OUR's accountability framework already includes independent appeal mechanisms for its decisions in the electricity, telecommunications and water sectors.

As it relates to tele-communications, the OUR's decisions are by statute subject to appeal to the Tele-communications Appeals Tribunal, and a number of such appeals have been made and heard.

Similarly, the Amended and Restated All-Island Electric Licence, 2011 explicitly provides for an appeal tribunal that hears appeals on electricity decisions relating to JPS. Condition 32 of said licence provides - in the case of a decision of the OUR - an avenue of appeal within 30 days and, in the case of a failure to act, within 21 days.

Under the licence, the appeal tribunal may confirm, modify or reverse the decision of the OUR or any part thereof. The tribunal may also, on application by the licence, order that the OUR's decision to which an appeal relates shall not have effect until the appeal is determined. Since its existence, the appeal tribunal has heard and determined a number of appeals by JPS.

Also, an appeal mechanism, that is, provision for the establishment of a tribunal to hear aggrieved service providers, is provided for in the water supply and sewerage licences.

Both the telecommunications and electricity tribunals are chaired by retired high court judges. There have been no appeals in the water sector and, therefore, no necessity to invoke the licence provision for the establishment of a tribunal.

We have also taken note of at least two other assertions in your editorial that are of concern to us. First, it is suggested that the OUR relied on a textbook, academic application of a capital asset pricing model to determine JPS returns, rather than using a real-world test of especial relevance to Jamaican market conditions.

We wish to underscore the point that: (a) the OUR followed strictly the provisions of the licence in arriving at its determination; (b) the approach adopted by the OUR accords with that proffered by JPS, save in respect of the determination of country risk premium; and (c) the use of a methodology to determine the country risk premium that tracks the performance of Jamaican bonds in the international capital market could hardly be regarded as having no relevance to 'Jamaican market conditions'.

Second, it is insinuated that the OUR's decision fails to take account of the claim that 80 per cent of JPS's costs are in foreign exchange. This is not true, as the determination takes account of the claimed ratio of local to foreign exchange costs and the formula for cost pass through allows for both monthly and annual adjustments. Both the JPS licence and the full determination notice are on our website: www.our.org.jm.

In closing, the OUR, through its accountability framework, which is consistent with international best practices, has adhered, and remains committed, to its statutory mandate, and to the principles of fairness and natural justice for all its stakeholders.

n Yvonne Grinam Nicholson is director of consumer and public affairs at the OUR. Email feedback to columns@gleanerjm.com.