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JPS under OUR assault - Tomblin says 'big-stick' watchdog acting like consumer advocate

Published:Wednesday | February 18, 2015 | 12:00 AMDaraine Luton
Tomblin

Describing the ruling of the Office of Utilities Regulation (OUR) that it refund customers more than J$973 million that it unilaterally imposed as foreign-exchange adjustments on fuel as "an assault" on the Jamaica Public Service Company Limited (JPS), the light and power provider said the regulator must recognise that its role is not that of being a consumer advocate.

"There is a consumer advocate who has that role, but the OUR is not the consumer advocate," Kelly Tomblin, president and CEO of the JPS, said yesterday.

"A regulator can interpret its role in a number of different ways. I think this regulator has determined that its role is one that leans towards consumer advocacy. We have a consumer advocate. A regulated body is designed to do two things, one of which is to make sure that national policy is implemented, and it is designed to make sure that there is an equitable environment," Tomblin said.

The OUR yesterday announced that the JPS has been ordered to repay the money it collected on fuels supplied by Petrojam Limited from March to December 2013.

The regulator said it "will continue to be vigilant in safeguarding the interest of consumers, while ensuring an equitable environment for investors in our utility services".

Tomblin said that her company "only bills customers what we had to pay", while adding that the OUR ruling "does come in an interesting time frame", which is two weeks after it appealed a rate determination. Part of the appeal involves the JPS's push to impose foreign-exchange adjustments on fuel supplied by Petrojam.

"It think it is clear that the JPS and the OUR have a fundamental difference in regulatory principle. The regulatory building we are going to pursue is that the utility has a right, like every business, to include the cost of doing business in the price of its product."

The directive of the OUR, which became effective February 16, was issued following consultations with JPS. The OUR said that the JPS charged customers the foreign-exchange recovery amounts although it was in contravention of the Amended and Restated All-Island Electric Licence, 2011.

"JPS has been directed to submit, within seven days from the effective date of the directive, details of how it proposes to effect the repayment, including the commencement date by which the refund will be made to customers. Customers are to be fully refunded within six months of the effective date of the directive," the OUR said.

Up to press time yesterday, the JPS said it was still considering how it will be proceeding even as Tomblin argued that the directive of the OUR is "a bad signal to any investor to invest in JPS and our new power plant".

The JPS is to build a 190-megawatt power plant at Old Harbour to replace old generating capacity on the grid with cheaper, gas-fired energy. Tomblin, however, said the overtures of the OUR will make it difficult for her company to get the approximately $50 billion that is needed to construct the plant.

"We are the regulated and they are the regulator. They have a lot of power over us, so it is not a matter of interest for us to say anything, publicly or otherwise. There is a big stick which the OUR carries," Tomblin said.

"The Government of Jamaica will have to decide whether the regulator is furthering its policy agenda ... . The continued assault makes it difficult for us to get cheap debt and equity. We will continue to work on that because we know Jamaica needs this power plant," Tomblin told The Gleaner.

The JPS said it experienced an under-recovery of its fuel cost, amounting to US$42 million in 2013 and US$18 million in 2014.

"No business can survive in the long run, nor attract much-needed capital, if it cannot recover its actual prudently incurred business costs," stressed the JPS president and CEO.

JPS made US$25.5 million in profits in 2014.