OUR falling short on guaranteeing standards - report

Daraine Luton, Senior Staff reporter

THE OFFICE of Utilities Regulation's (OUR's) Guaranteed Standards Scheme is not achieving its intended objective to ensure that utility providers maintain an acceptable level of service delivery to consumers, a report by the Auditor General's Department has found.

The report, which was tabled in the House of Representatives yesterday, also said there are inconsistencies with the appointments of the director general and the deputy directors general, which could undermine the independence of the holders of these offices.

The guaranteed-standards mechanism requires utility providers to compensate consumers for breaches of standards. Some breaches may attract automatic compensation by the utility provider or a claim submission by the affected customer.

For example, the Jamaica Public Service Company (JPS) must reconnect a customer within 24 hours of payment of the overdue amount and reconnection fee. Failure to reconnect power within the time frame attracts automatic compensation.

The Auditor General's Department noted that 41 per cent of breaches committed by the National Water Commission (NWC) are automatic, while the other 59 per cent have to be claimed for by the customer.

In the case of the JPS, automatic compensation is 30 per cent of breaches, while 70 per cent have to be claimed for by the consumer.

LOW LEVEL OF CLAIMS

The Auditor General's Department said it found that for calendar years 2008 to 2012, the NWC and the JPS's compensation, based on consumers' claims, was only $206,000 (or 0.09 per cent) of $223.9 million and $59.9 million (or eight per cent) of $709.1 million, respectively.

"The low level of claims has not acted as an effective driver of efficient performance for these utility providers to improve efficiencies and adhere to the required standards. Therefore, the compensation mechanism is not assisting OUR in achieving its legislated mandate to undertake such measures as it considers necessary or desirable to protect the interests of consumers," the auditor general's report said.

The Auditor General's Department has recommended that the OUR review the automatic and claimable compensation system with the aim of fostering greater compliance with the Guaranteed Standards Scheme by the utility providers.

"The OUR could consider levying a penalty on the utility providers for breaches in addition to the current payments being made to consumers. In the short term, the OUR should periodically publish details of all claimable breaches committed by the utility providers," the report said.