J. Paul Morgan, OUR director general. - File
The Office of Utilities Regulation (OUR) has proposed to link its regulatory fees to the revenues of the companies it oversees, a development that would mean little to the larger firms, but likely translate a slash into the payments by smaller telecoms.
A company like Oceanic Digital Jamaica, which offers mobile telephone service in Jamaica as MiPhone, could, for instance, see its contribution to the OUR cut in half.
The OUR has given firms up to mid-February to comment on its plan, having last week opened its Notice of Proposed Rule-Making (NPRM) on changing the regime of regulatory fees.
The idea is to fix the rate charged to utility as a percentage of revenues, depending on the sector in which they operate.
As it now stands, the OUR charges fees just to meet its expenditure. But according to a document outlining the proposal, and on which the utilities have been asked to comment, fees have been allocated to "sectors and providers of specified services based on an analysis of the level of effort to regulate each of the sectors".
Matter of principle
"As a matter of principle the OUR has felt that the fee should first reflect the costs that a particular company or group of licensees impose directly on the OUR," the agency explained in its document.
However, firms have in the past complained of not being given sufficient time to do their own planning with respect to budgetary allocation. There have also been concerns about the level of fees.
The electricity and water sectors are characterised as "monopoly infrastructure" industries, and the charge to them has been relatively straightforward. Jamaica Public Service Company (JPS), the light and power provider, and the National Water Commission (NWC) have historically been required to pay between 0.28 and 0.35 per cent of their revenues.
But in the telecommunications sector, liberalised since the start of the decade and with many players vying for market share, the OUR has had difficulty in determining an equitable fee structure.
"The problem has been the paucity of information regarding the operations of all licensees, except Cable and Wireless (C&WJ), who, by virtue of its legacy position, had been filing reports on its operations with the office on a regular basis," said the OUR.
"The basis for computing the allocation across these carriers has been on the number of subscribers serviced by each carrier as evidenced by the reports on numbers usage."
Historically the telecoms have been charged between 0.20 and 0.26 per cent of their revenues after outpayments to competitors for terminating on their network.
Oceanic Digital (MiPhone) is a small outfit compared to C&WJ and Digicel, and thus, has paid a higher proportion of revenue to the regulator - 0.49 per cent.
The fact that fees have consistently fallen within a certain range as a percentage of revenue led the regulator to believe that assessing revenues of utilities would be a useful mechanism of determining fees.
In its recommendation, the OUR proposes to fix charges as a percentage of revenues at 0.33 per cent of water and electricity companies' revenues, while telecoms would payout 0.22 per cent of their revenues over the next four years starting this April.
The change would hardly vary payments to be made by most of the firms reviewed in the document except for MiPhone which pays more than double that.
Based on the new fee structure, JPS would have to fork out $47 million in the new fiscal year, while C&WJ and NWC would pay the regulator $37 million and $28 million respectively.
Utility companies have up to February 16 to reply to the director general of the OUR, J Paul Morgan, to comment on the proposal.
camilo.thame@gleanerjm.com
