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OFFICE OF UTILITIES REGULATIONRegulating Utilities for the Benefit of All

ISO 9001:2015 Certi�ed

ANNUAL REPORT

2017-2018

1OFFICE OF UTILITIES REGULATION ANNUAL REPORT 2017-2018


ISO 9001:2015 Certified

ANNUAL REPORT

2017-2018

OUR Annual Report Cover_inside.pdf 2 24/07/2018 2:06 PM

CONTENTS

Accredited by Member of the International Accreditation Forum Multilateral Recognition Arrangement for Quality Management Systems

Introduction, Mission Statement and Objectives

The Offi ce

Corporate Governance Report

Chairman’s Report

Director General’s Report

Summary of Achievements

The Executives

Departmental Reports

Secretary to the Offi ce (STTO)

Consumer & Public Affairs (CPA)

Regulation, Policy, Monitoring & Enforcement (RPME)

Legal

Information Technology & Risk (ITR)

Administration & Human Resource

Finance

Internal Audit

Consumer Advisory Committee on Utilities (CACU)

20th Anniversary Celebrations

Corporate Highlights

Organisational Chart

Senior Management Compensation

Financial Statements 2017/2018

Independent Auditors' Report to the Members

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Reserves

Statement of Cash Flows

Notes to the Financial Statements

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This, the twenty-fi rst report of the Offi ce of Utilities Regulation (OUR), will inform Parliament and the country of the regulatory activities

and fi nancial operations of the OUR for the period 2017 April 1 to 2018 March 31.

INTRODUCTION

The OUR was established in 1995 by the OUR Act as a body corporate with its operations beginning in 1997 January. Under the Act, and its

amendments thereafter, the OUR is charged with the responsibility of regulating the provision of utility services in the following areas:

• Electricity

• Telecommunications

• Water and Sewerage

THE OUR MISSION

OUR contributes to national development by effective regulation of utility services that enables consumer access to modern, reliable,

affordable and quality utility services while ensuring that service providers have the opportunity to make a reasonable return on their

investment.

VISION STATEMENT

The OUR is a trusted, purpose-driven and stakeholder-focused regulator, that has enabled Jamaica to be globally recognised as a leader in

utility consumer protection and satisfaction and sustainability of regulated entities.

OUR OBJECTIVES

• To ensure that consumers of utility services enjoy an acceptable quality of service at a reasonable cost.

• To establish and maintain transparent, consistent and objective rules for the regulation of utility service providers.

• To promote the long-term, effi cient provision of utility services for national development consistent with Government policy.

• To provide an avenue of appeal for consumers in their relationship with the utility providers.

• To work with other related agencies in the promotion of a sustainable environment.

• To act independently and impartially.

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ANNUAL REPORT 2017-2018OFFICE OF UTILITIES REGULATION 3

OUR OBJECTIVESOUR OBJECTIVES

To provide an avenue of appeal for consumers in their relationship with the utility providers.To provide an avenue of appeal for consumers in their relationship with the utility providers.



OUR OBJECTIVES

•

•

•

•

•

•





To ensure that consumers of utility services enjoy an acceptable quality of service at a reasonable cost.

To establish and maintain transparent, consistent and objective rules for the regulation of utility service providers.

To promote the long-term, effi cient provision of utility services for national development consistent with Government policy.

To provide an avenue of appeal for consumers in their relationship with the utility providers.

To work with other related agencies in the promotion of a sustainable environment.



To work with other related agencies in the promotion of a sustainable environment.



To establish and maintain transparent, consistent and objective rules for the regulation of utility service providers.







THE OFFICEMr. Matalon’s service to Jamaica’s � nancial and economic development has spanned his tenures on public and private sector boards, charitable organisations and national government-appointed committees.

His appointments included: Chair, Development Bank of Jamaica (DBJ) and in that capacity, serving on a number of Enterprise Teams overseeing privatisation as well as Public-Private Partnerships transactions; President of the Private Sector Organisation of Jamaica (PSOJ), and during his tenure initiating the formation of a Private Sector Working Group on Tax Reform (PSWG); Scotia Group Jamaica Limited (Director); RJR Gleaner Communications Group (Director); The Gleaner Company Limited (Vice Chairman); Chairman of ICD Group Holdings Limited and its subsidiary British

Caribbean Insurance Company Limited, and Director of other ICD subsidiary and associated companies. The charitable and other organisations he has served include: St. Patrick’s Foundation which supports charitable activities in inner-city communities (Honorary Chairman); Hillel Academy K-12 international and Multicare Youth Foundation, which supports 32 inner city schools in the KMA with curriculum enrichment, and operates the YUTE programme aimed at empowering unattached youth ages 17-29 (Chairman of the Board of Governors).

He was conferred with the Order of Distinction in the Rank of Commander for his contribution to the public and private sectors, and community service.

He is a graduate of the London School of Economics and Political Science.

Noel daCosta has served on numerous boards in the private and public sectors, and has been at the helm of several local and international organisations including Petrojam Ltd., the Jamaica Chamber of Commerce, the Jamaica Institution of Engineers, the Jamaica Debates Commission, the Master Brewers Association of the Americas, and the Caribbean Council of United Way Worldwide. A consultant with more than � fteen (15) years’ experience in Corporate Relations, he has over three decades in technical and engineering leadership. He

has worked in the beverage industry for many years and is a founding partner in the engineering � rm, Jentech Consultants Ltd.He has postgraduate degrees in Engineering, Business Administration and Insurance, and is a Fellow of the Jamaica Institution of Engineers, as well as the Institution of Chemical Engineers (UK).

In 2012 he was awarded the Jamaican National honour of Commander of the Order of Distinction for his contribution to engineering and manufacturing.

JOSEPH M. MATALON, CHAIRMAN

NOEL daCOSTA, DEPUTY CHAIRMAN


Ms. Chong is an experienced business development and utilities regulation practitioner. For more than � fteen (15) years she has served on the Consumer Advisory Committee on Utilities (CACU) and as its Chairman since January 2004. Under her direction, the CACU has been at the forefront of consumer advocacy activities in Jamaica and has become an integral part of the utilities regulation landscape. She is also a member of the Consumer Protection Tribunal of the Consumer Affairs Commission.

As Trade Commissioner with the Government of Canada, Ms. Chong has successfully delivered several projects and contracts in the cleantech, transportation

and education sectors and has developed specialisation skills in the international business practice of Corporate Social Responsibility.

She is a graduate of Florida International University and the University of Florida with Bachelor and Masters degrees in International Relations (minor in Economics) and Public Administration respectively and other professional diploma and certi� cate courses.

Yasmin is a Rotarian, a practicing Roman Catholic, and a proud alumna of the Immaculate Conception High School.

He is the Executive Director of the Caribbean Policy Research Institute (CaPRI), the region's leading think-tank, focusing on public policy issues. Damien is also a senior lecturer in the Department of Economics at the University of the West Indies (UWI), Mona, where he has taught graduate and undergraduate courses in introductory economics, macroeconomic theory, and international trade and � nance.

Damien’s research has been in the areas of debt, poverty and distribution, and international trade, and has been published in international economics journals and also in edited collections. He is the author and editor (with

David Tennant) of Debt and Development in Small Island Developing States (Palgrave Macmillan, 2014).

In the corporate world, Damien has served on the boards of companies, including Desnoes & Geddes, the National Export-Import Bank of Jamaica, Dyoll Insurance Company, Mutual Life Assurance Company, and Bitt, Inc (Barbados).

Damien earned a B.A. from York University (Canada), a M.Sc. from UWI and a Ph.D. from New York University (USA), all in economics.

YASMIN CHONG

DAMIEN KING

He is a partner at Hart Muirhead Fatta, practising mainly in the areas of company law, securities, � nancial services, mergers and acquisitions, and capital market transactions.

Admitted to practice in Jamaica in 1993, he was educated at UWI and the Norman Manley Law School (NMLS). He joined Myers, Fletcher & Gordon as an associate focusing on commercial litigation. He entered the public sector in 1999, joining Financial Sector Adjustment Company (FINSAC) Limited, an agency under the Ministry of Finance & Planning set up to rescue and rehabilitate the local � nancial sector. On the substantial conclusion of FINSAC's activities, he joined Hart Muirhead Fatta in 2002.

He is a director of Independent Radio Company Limited and Portland JSX Limited and has served as a director of several entities in the public and private sectors. He is currently a member of the Commercial Law Committee of the Jamaican Bar Association and an Associate Tutor at the NMLS.

He serves on the Corporate Governance Committee of the PSOJ and conducts training in corporate governance. He has been consistently named as one of the leading commercial attorneys in Jamaica by both Chambers Global and the International Financial Law Review.

He is the Chief Information Of� cer (CIO) for the GraceKennedy Group. Prior to becoming CIO, he held several leadership roles within GraceKennedy. These include being General Manager of Dairy Industries (Jamaica) Ltd (DIJL), CEO of Hardware & Lumber Ltd., as well as being General Manager of several other GraceKennedy subsidiaries. He has also contributed to new product and process development, compensation design, major construction projects and community development projects since joining GraceKennedy in 1997.

Simon has more than � fteen (15) years experience in the steel industry in general management, engineering, metallurgy, customer service, quality assurance, process

improvement, product development and IT deployment. He is a director of GraceKennedy Properties Ltd., Grace & Staff Community Development Foundation, and the Grace Cooperative Credit Union. He is a director of the Jamaica Manufacturers and Exporters Association, Chairman of the Jamaica National Agency for Accreditation (JANAAC) [2007-2012 and current], and was Chairman of the National Quality Infrastructure Project from 2003 to 2007. He holds a Bachelor of Applied Science (Metallurgical and Materials Sciences) from the University of Toronto and a Master of Applied Science (Management Sciences) from the University of Waterloo. He is a registered Professional Engineer in Ontario.

NOVAR PATRICK MCDONALD

SIMON ROBERTS


He is the Director General of the OUR, and an ex of� cio member of the Of� ce.

He is a regulatory specialist, economist and attorney-at-law and has more than twenty � ve (25) years’ experience at various levels in quasi-judicial organisations. His educational background covers law, management and economics with extensive specialised training in, among other areas: regulation, competition analysis, strategic planning, leadership, international negotiation and corporate planning.

He joined the OUR in February 2000 and before that worked at the Jamaica Bauxite Institute and the Fair

Trading Commission as an economist. He also lectured at the post graduate level on Regulation and Regulatory Reform in the Department of Government, University of the West Indies (UWI), Mona for more than ten (10) years and served as a tutor in the UWI’s Masters In Telecommunications Regulation and Policy Programme. He has a Master’s degree in Regulation from the London School of Economics, obtained after being awarded a Chevening Scholarship in 1997, a Bachelor of Science (B.Sc.) in Economics & Management (UWI), and Bachelor of Law (LL.B) from the University of London. He also holds a Certi� cate in Legal Education from the NMLS.

ANSORD E. HEWITT, DIRECTOR GENERAL (EX OFFICIO MEMBER)



CORPORATEGOVERNANCE

REPORT

The Of�ce had twelve (12) meetings during the year under

review. It considered and took decisions on a wide range

of issues relating to all the sectors regulated by the OUR, and on

organisational policy matters. These included determinations and

decisions on tariffs, approvals for various projects, agreements,

codes, and protocols, directives to utility providers, audits of aspects

of utility companies’ operations, recommendations to the portfolio

ministers for the issue of licences, and policy directives and decisions

on administrative matters. Information on these activities can be

found in the Departmental Reports which follow.

Much of the work of the Of�ce is done through its �ve committees

which give initial consideration to matters before the Of�ce, and

make recommendations to the full Of�ce for �nal decisions and

determinations. The committees, their main responsibilities, and their

membership are set out, together with a record of the attendance of

the members of the Of�ce at Of�ce and Committee meetings.


Committee Main Responsibilities Members

Audit and Conduct To ensure the OUR’s financial integrity, and to provide oversight of the organisation’s internal controls, risk management, and internal and external audit.

Damien King, ChairNoel daCosta, Deputy ChairSimon RobertsDonald Reynolds, (co-opted Member)

Finance and Budget To monitor and review the effectiveness of the accounting, treasury, materials management, and payroll activities.

Joseph Matalon, ChairDamien King, Deputy ChairSimon RobertsDonald Reynolds (co-opted Member)

Technical

To provide oversight on planning development, and the technical and operational functions of the OUR to ensure efficiency and effectiveness in the delivery of appropriate regulations for the sectors for which the OUR has responsibility.

Noel daCosta, ChairYasmin Chong, Deputy ChairSimon Roberts

Legal Affairs

To provide general legal oversight; advice to the Legal department; to conduct legal reviews of matters and to make recommendations to the Office, to review policy recommendations, and monitor the implementation of legislative revisions.

Novar Patrick McDonald, ChairJoseph Matalon, Deputy Chair

Human Resource and Compensation

To monitor and review the effectiveness of the Human Resource and Administration department’s activities and other related matters.

Yasmin Chong, ChairNoel daCosta, Deputy Chair

Table 2: Office Members' Skill Set

Name General

Man. Finance & Audit

Strategic Man.

HumanResource

LegalUtilities

RegulationGovernance IT Engineering

Joseph Matalon,Chairman

x x x x x

Noel daCosta,Deputy Chairman

x x x x x

Yasmin Chong x x x

Damien King x x x x

N. Patrick McDonald x x x x

Simon Roberts x x x x

Ansord Hewitt x x x x

Table 1


The Of�ce gave considerable attention to corporate governance. Of special note is the Governance Framework Project, designed to strengthen the OUR’s institutional capacity to carry out its prescribed functions and improve the quality and sustainability of its governance framework. This Inter-American Development Bank-�nanced project, will be carried out in three phases, following a successful initial �rst phase which resulted in the development of a Governance Manual. This Manual was formally adopted by the Of�ce in 2016. Phases two and three will be implemented in 2018/2019.

At its meeting in 2017 May, the Of�ce agreed to conduct a performance evaluation survey as part of its commitment to the highest standards

of corporate governance, and in accordance with the requirements of the Government of Jamaica’s Revised Corporate Governance Framework for Public Bodies (2012). This survey was divided into three sections: General Information; Of�ce and Of�ce Committee Performance Evaluation; and Of�ce Member and Committee Chair Performance Appraisal. It was structured around the ten dimensions of good Of�ce governance. The purpose of the survey was to gain an insight into how the Of�ce members perceive the Of�ce to be performing in key areas, and for each Of�ce member to undertake an assessment of his/her performance.

All members of the Of�ce completed the survey, and their responses were reviewed and analysed by an independent consultant. This consultant is scheduled to present her report and recommendations to the Of�ce in 2018 May. The Of�ce will consider the report, and discuss improvements that can address any identi�ed gaps or weaknesses. All agreed actions are to be included in an Of�ce implementation improvement plan containing the key actions, timeframes, and responsibilities.

The Of�ce was also fully involved in the development of the OUR’s Corporate Business Plan and Budget 2018/2019 – 2021/2022: from providing policy direction in the initial strategic planning stage, through to approving the �nal

Table 3: Of�ce Attendance Record for the Full Of�ce & Of�ce Committees Meetings 2017/2018

Of�ceFull Of�ce

(N=13)Audit(N=4)

Finance & Budget(N=6)

Human Resource & Compensation

(N=11)

Technical(N=10)

Legal Affairs(N=0)**

Joseph Matalon 12 N/A 5 2* 9* 0

Noel daCosta 13 3 N/A 9 10 N/A

Damien King 13 4 5 N/A N/A N/A

Simon Roberts 10 3 5 N/A 9 N/A

N Patrick McDonald 9 N/A N/A N/A N/A 0

Yasmin Chong 11 N/A N/A 11 8 N/A

Ansord E. Hewitt 10 N/A 4 7 9 0

KEY: N - Total number of meetings. N/A: - Not Applicable, i.e the person is not a Member of that Committee* Attendance Optional** Although the Legal Affairs Committee had no meetings during the year, the members held a number of informal consultations and reviewed documents affecting the OUR. Chairpersons highlighted.


draft plan for submission to the Ministry of Finance and the Public Service, in accordance with the requirements of the Public Bodies Management and Accountability Act. There were no sigini�cant adjustments or amendments to this Plan during the year under review.

The Of�ce has paid special attention to risk management, and has ensured that this has become a central element in the organisation’s planning, projects, and activities. The Of�ce has moved to strengthen internal �nancial management, including controls and reporting, and the preparation of a Finance Manual which should be completed by mid-2018.

Members of the Of�ce have participated in conferences, workshops and training programmes, to enhance their understanding of the most recent developments affecting utilities and the role of regulators, and to better equip them to deal with regulatory and leadership challenges.

COMMITTEES

Audit CommitteeThe Audit Committee had four quarterly meetings during the year under review. The Committee devoted much attention to the operational and process audits conducted by the Internal Auditor, and to the resolution of the �ndings of these audits. The Committee also gave priority to the issue of risk management, and provided guidance for the development

of a Risk Register for the organisation. Other issues included the appointment of an External Auditor; procurement matters; the Ministry of Finance’s reporting requirements; and policies on the organisation’s credit card, motor vehicles, and telephone usage. It also developed procedures to deal with any potential con�icts of interest which may arise affecting members of the Of�ce. The Audit Committee, in a joint meeting with the Finance and Budget Committee, also reviewed and approved the report of the external auditors on the OUR’s �nancial statements for 2017/2018.

Finance and Budget CommitteeThe Finance and Budget Committee, which had �ve meetings during 2017/2018, focused its attention on the proper management of the organisation’s �nancial affairs, and mandated action to improve and strengthen �nancial accountability, controls, and reporting. It initiated the preparation of a Finance Manual; revised the investment rules; and dealt with a range of issues under its purview, such as the organisation’s tax liabilities, resolving the long-outstanding start-up loan from the Government of Jamaica, foreign exchange requirements, external consultancies for projects, and �xed assets. The Committee also played a pivotal role in the development and approval of the organisation’s annual budget.

Technical CommitteeThe Technical Committee, consistent with its mandate, addressed issues in all the sectors regulated by the OUR. It provided policy guidance to the technical staff, reviewed their

submissions, and made recommendations to the Of�ce on determinations, decisions, and other actions. These included, in the electricity sector: power purchase agreements (Jamaica Private Power Company, JAMALCO’s 94MW plant); the Jamaica Public Service Company Limited’s (JPS’s) 2017 annual tariff adjustment and extraordinary tariff application; preparatory studies for the JPS’s 2019 rate review; JPS’s grid scale energy storage project; JPS’s proposed 14MW distributed generation project; the development of proposed accounting separation; meter testing; electricity sector codes; a review of the Electricity Disaster Fund investment plan; the termination of the Electricity Ef�ciency Improvement Fund; and the introduction of the System Bene�t Fund.

In the water and sewerage sectors, the Committee recommended tariffs for small water suppliers: Dynamic Environmental Management Limited, Runaway Bay Water Company Limited, Can Cara, Landmark Developers Limited; made a recommendation for a water supply licence for Tryall Golf and Beach Club; reviewed business proposals from the National Water Commission; reviewed a meter testing protocol developed by the OUR’s technical staff and the Jamaica Bureau of Standards; and approved a follow-up plan of action arising from an audit of the K-Factor programme. The Committee’s work in telecommunications included recommendations for service provider licences: (S&B Communications Limited and Verge Communications). It reviewed and made recommendations on �xed termination rates, a common short code scheme; the


development of infrastructure sharing rules; the establishment of a new area code for Jamaica; RIO 6 revised tariff schedule; and began work on monitoring the quality of service from broadband providers and an ICT usage and adoption survey. The Committee also played a role in Jamaica’s �rst Natural Gas Conference and contributed to the development of a gas policy.

Human Resource and Compensation CommitteeHuman Resource and Compensation Committee paid much attention to the revision of sections of the Personnel Policy and Procedural Manual, which was necessary to resolve non-conformances revealed by internal audits. These included amendments to the Leave Policy, the Promotions Policy, the performance appraisal process, staff loans, attendance reporting, and the establishment of minimum standards for employees’ records. The Committee reviewed the operations of the OUR’s Pension Fund, and initiated the development of a retirement preparation programme. The Committee took action to ensure that the OUR would have a comprehensive disaster preparedness and staff emergency plan. The Committee also began an institutional review, aimed at strengthening the organisation. This will be further developed under the previously mentioned IDB-supported Governance Project.

Corporate Social ResponsibilityIn the area of corporate social responsibility, the OUR is guided by the relevant principles in the Government of Jamaica’s Corporate

Governance Framework for Public Bodies, and in the PSOJ’s Corporate Governance Code. The OUR’s Mission Statement and Objectives, also apply to the Of�ce’s philosophy towards corporate social responsibility. For the Of�ce, it is a sine qua non that, as a public entity, everything that the OUR does must be in the public interest and for the public good.

It must also be recognised that the OUR’s sole source of income is the fees it collects from the regulated entities, and that the statutes under which it operates prohibit the OUR from using any part of these fees for non-regulatory purposes. This restriction therefore excludes the OUR from participating in philanthropic activities in the area of corporate social responsibility. Nevertheless, the OUR’s approach has been to incorporate, where possible, elements that accord with these responsibilities, in various activities which it undertakes in the

ful�lment of its regulatory mandate. The OUR also encourages voluntarism in charitable activities by its staff.

Among the OUR’s activities are initiatives aimed at facilitating access to utility services by persons with disabilities; involvement in the Girls in ICT Day programme; participation in national events such as the annual Denbigh Agricultural Show; and the employment of university undergraduates as summer interns. The OUR has also transformed its library into an Information Centre (OURIC), and has opened it to the public. OURIC is a valuable resource for research, particularly to persons with an interest in regulation and the regulated entities. At a voluntary level, OUR staff members have participated in annual Labour Day projects (with an emphasis in recent years on elementary education), and in corporate fund-raising activities for charities, such as the Sigma Run.

Table 4: Of�ce Remuneration (2017/2018)Position Board Fees ($) Remuneration ($)

Chairman 2,170,000

Deputy Chairman 2,280,000

Members 4,900,000

Director General 15,799,420

Total 9,350,000 15,799,420


CHAIRMAN'SREPORT

Apart from continuing its work to ensure that the OUR achieves and

maintains the highest international standards in corporate governance,

the Of� ce has seen off another year packed with a range of regulatory activities

which called into play the full array of skills, knowledge and experience of its

diverse membership. The listings of publications by the OUR provided elsewhere

in this report provide ample evidence of the wide scope of regulatory matters on

which the Of� ce was called upon to adjudicate, offer advice, issue prescriptions

and directives, litigate or respond to litigation by others.

As regards corporate governance, our prime responsibility is to make sure that

the OUR’s vision, mission, mandate and independence are maintained, while

balancing stakeholders’ interests. We are also tasked with the responsibilities

assigned under the OUR Act and other sector-speci� c legislation. These

responsibilities are carried out by the Of� ce as a whole, through Committees of

the Of� ce, or through delegation to professional Staff.

Our Audit and Conduct, Finance and Budget, Technical, Legal Affairs and Human

Resource and Compensation Committees all worked assiduously throughout

the year to carry out their individual mandates. The details of their activities are

set out in our newly designated Corporate Governance Report.

The OUR’s governance framework underpins clear and transparent processes

for making decisions and providing recommendations. The Of� ce advises

Joseph M. Matalon


management and oversees the organisation’s

strategic direction and planning, taking into

account both the opportunities and risks to

the OUR, to the regulated sectors, and to the

nation. We have also sought to ensure that we

follow established decision-making procedures

which are described in our Terms of Reference

and detailed in the OUR’s Operations Manual.

During the year we worked with the Inter-

American Development Bank to implement and

progress the Governance Framework Project,

an institutional capacity building project being

implemented in three phases. The �rst phase

produced the Governance Manual adopted

in 2016, and two further phases are to be

implemented in 2018 -2019. Notably, the Of�ce

commissioned a performance evaluation survey

on its performance as part of our commitment

to corporate governance, and in accordance

with the requirements of the Government

of Jamaica’s Revised Corporate Governance

Framework for Public Bodies (2012). This

exercise has produced valuable insights and

has resulted in an Action Plan of corrective

measures which the Of�ce is committed to

implement in 2018/2019. We are resolved to

make this survey an annual exercise.

Another of the key priorities identi�ed by the

Of�ce is to embed a strong risk assessment,

management and mitigation culture throughout

the organisation. During the period under

review, the Of�ce took steps to actively assess

and determine the organisation’s risk pro�le

relative to its risk appetite, and mandated the

management to implement plans and activities

that are appropriate and adequate to mitigate

all identi�ed sources of risk. As regards

the OUR’s �nances, we have continued the

initiative commenced last year to complete the

development of a Finance Manual to bolster

internal processes and controls. I expect that

the Finance Manual will be completed and the

policies contained therein fully implemented

during �scal year 2018/2019.

It is imperative that the OUR’s approach to

regulation remains consultative, facilitative,

current and forwarding looking. The Of�ce

therefore considers it part of its responsibility to

keep abreast of, and indeed insofar as possible,

to anticipate the major challenges requiring

regulatory and policy interventions across the

different sectors with a view to either taking

action or recommending measures to address

such challenges. In this regard, while we can

take some satisfaction in several achievements

in which the OUR has played a pivotal role in

the �scal year 2017/2018, I am also cognizant

that de�ciencies, challenges and opportunities

are still to be addressed.

In the electricity sector, I am convinced that

the seemingly intractable problem of losses

presents an opportunity for collaboration

across a broad spectrum of stakeholders in

the public and private spheres to diagnose,

plan and embark on both technical and social

interventions to arrest the unsustainable level

of losses that continue unabated, and which

place upward pressure on tariffs and a drag on

the competitiveness of the Jamaican economy

in general. In this regard, I continue to urge the

authorities to convene such a grouping with a

clear terms of reference to address the matter.

Elsewhere in the sector I expect the drive to

continue to increase renewable penetration

even while giving even greater focus to storage,

The Government’s decision to assign responsibility to the OUR for regulating the emerging natural gas sector is new and exciting, and a major vote of con�dence in the organisation.


distributive generation and grid modernisation.

The latter especially with a view to leveraging

all the bene�ts of smart technology to improve

demand side management, customer choices,

losses management and automation.

As with the electricity sector, the losses in the

water sector experienced by the National Water

Commission are also at unsustainable levels.

Here again I expect continued focused attention

on the management of this problem. It is hoped

that the NWC’s current initiatives to address

this problem through network upgrades, use of

technology and private sector collaboration will

yield fruit. I am also pleased to see the continued

interest in developing private sector-led projects

in the water and sewerage sector to address the

demand and coverage gaps. In this context the

lack of adequate policy, strategy and legislation

for this sector, which has resulted in the absence

of a framework for its development, continues

to be a source of disappointment for the OUR,

as it is dif�cult and more expensive to attract

private sector investments in the absence of

such a framework. I urge policy makers to

address this de�ciency without further delay.

The Government’s decision to assign

responsibility to the OUR for regulating the

emerging natural gas sector is new and

exciting, and a major vote of con�dence in

the organisation. The assumption of this

responsibility will have far-reaching implications

for the organisation, its structure, required

competencies, and work programme.

Turning to the telecommunication sector, I am

concerned that the momentum of dynamic

development may be slowed by lack of

investments in new technologies that will foster

innovation and increased productivity. At the

same time, the challenges and opportunities

posed by the Internet of Things (IOT), Arti�cial

Intelligence, Big Data Analytics and Block

Chain Technology can only be met by a re-

thinking of policies and incentives, both on the

demand and supply side of services. The OUR

is committed to undertake such interventions

as are within its gift to increase and sustain

competitive dynamics. At the same time, we

would urge the government to ensure that its

policy interventions and allocation of scarce

resources such as spectrum and licences serve

to increase investments and competition within

the sector.

I take this opportunity to commend the

management and staff of the organisation for

the efforts expended and results achieved in

2017/2018, and urge the continued pursuit of

excellence in 2018/2019. I also wish to record

my appreciation of the commitment and focus

displayed by my fellow Of�ce Members. It has

been another gruelling year, but we remain

deeply committed to our mandate and the

accomplishment of those tasks that lie ahead.

Once again we ask our stakeholders to join

and engage with us fully as we take on the

challenges and promises of 2018/2019, and

continue the OUR’s mission of contributing to

nation building.

I take this opportunity to commend the management and sta� of the organisation for the e�orts expended and results achieved in 2017/2018, and urge the continued pursuit of excellence in 2018/2019.

Joseph M. Matalon

Chairman


Ensuring that they hew steadfastly to the principles and practices of

transparency and accountability are among the means by which non-elected

or non-majoritarian of� cials and institutions such as the OUR maintain their

legitimacy with the general public. Absent this, there is democratic de� cit. In

this regard, the production of the OUR’s Annual Report is not just a ful� llment

of a statutory obligation but represents for us a means by which we account to

our stakeholders on our stewardship each year.

I am happy to af� rm that the OUR remains cognizant of the implicit assumption

in its establishment that effective regulation will make a positive contribution

to Jamaica’s national development and economic transformation. We therefore

continue to emphasize the following as among our key objectives:

• Driving improved levels of ef� ciency in the utility sectors to facilitate

lowering of costs, improved service delivery, expanded access and improving

Jamaica’s overall economic competitiveness;

• Modernising Jamaica’s utility infrastructure keeping pace with technological

and other developments;

• Ensuring reliability and sustainability of utilities;

• Functioning as a central repository of readily accessible information to

inform all utility related decisions and stakeholders; and

• Providing informed analyses and policy advice.

DIRECTOR GENERAL'S

REPORT

Ansord E. Hewitt


During the review period there were signi� cant

and notable achievements in all of the regulated

sectors and the OUR continues to build on a

body of work of which it can be justly proud.

I have recounted some of these below and

there are additional details in the body of the

report. Even so, there are projects and activities

on our calendar running behind schedule. We

will redouble our efforts in 2018/2019 to get

these on track as I remain � rmly committed to

continuing to expedite our turnaround time on

projects and activities.

2017/2018 REVIEW

CONSUMER AND PUBLIC AFFAIRS

Improving responsiveness to Customers’ Complaints

Our Consumer and Public Affairs (CPA)

department pursued robust public education

outreach and complaints and appeals handling

programmes. Notably, the Consumer Affairs

Unit (CAU) handled over three thousand eight

hundred contacts which it reported was just

one per cent less than the 2016/2017 total. It

indicated that the majority of these contacts

related to billing matters (48%) and service

interruptions (18%).

I am pleased to observe that the department

has sought to re� ne its responsiveness to

trends in consumer complaints and issues.

This was particularly evident in the initiative

taken to get NWC to cease the application of

the Late Payment Fee (LPF) and address the

concerns regarding issuance of multiple bills

in a single billing period. A similar approach

was manifested with regard to one of the

telecommunication companies’ attempt to

impose a Pre-paid Maintenance Fee without

what the OUR deemed, the appropriate notice.

The unit is also leading the charge in addressing

concerns expressed by Persons With Disabilities

(PWDs) that they are adversely affected by

payment requirements and other service

providers’ policies. Cognizance of these issues

arose from review of complaints patterns and

engagement with representational groupings. I

have directed that the matter be given focused

attention and I am pleased to report that the

engagement with representative organisations

has proven enlightening and instructive so far.

A formal Mystery Shopping survey and the

inaugural customer service forum were two

commendable additions to the department's

activities. These are representative of the

OUR’s efforts to not only be innovative and

pre-emptive in its approach, but also to

ensure that it delivers tangible bene� ts to

stakeholders. Signi� cantly the � ndings of the

Mystery Shopping survey revealed a 30% gap

in customer service satisfaction. We expect and

will monitor to see the extent to which the

utilities take these � ndings into account going

forward and what regulatory interventions may

be necessary.

The OUR held its Staff Retreat on 2017 August 18 at Mystic Mountain in Ocho Rios, St. Ann.

OUR staff members listen keenly to a Quality Management Systems (QMS) presentation at the Staff Retreat on 2017 August 18.


For the review year, whether by way of direct

intervention or from the presence of the

Guaranteed Standards, consumers were able to

bene� t to the tune of over one hundred and

forty-four million dollars ($144 million) in credit

during the year.

Public Affairs

This year marked the denouement of our Parish

Connection series, a road show in collaboration

with the utilities providers that took us to rural

and under-served parishes to establish or re-

establish continuing consumer and stakeholder

dialogue for a two way � ow of information

to the OUR. It allowed the utilities to share

information on projects and development with

consumers on a planned and consistent basis.

The providers made strategic use of the series

of events which redounded to the consumers’

bene� t especially in terms of immediate contact.

By way of example, the telecommunications

companies, used the fora to educate users

about the safe and responsible usage of their

mobile phones and other products and services.

The companies reported as well that they

have developed more direct relationships with

customers who live in remote areas. The fora

also provided opportunities to highlight and

address the adverse effect on communities

of vandalism and theft of equipment and

trespasses on the networks and properties of

the utilities.

There was intense public education outreach

activity leading up to the introduction of ten

digit dialling and the additional area code ‘658’.

Designing consistent and centralised messages

and a focussed outreach and communications

programme was effected working in

collaboration with the service providers, the

Consumer Advisory Committee on Utilities

(CACU) and the Consumer Affairs Commission,

through the OUR-constituted Consumer

Awareness Taskforce.

Social media continues to be a viable and

increasingly important communication channel

through which we reach consumers and

stakeholders and we have included webinars

as another medium through which we reach

stakeholders and solicit feedback.

Director General Ansord E. Hewitt (right) participates in the ground-breaking for the construction of the JPS 24.5 megawatt energy-storage facility at its Hunts Bay power plant on 2018 March 2. The project is to be undertaken by Micro Grids and Distributed General for North America, ABB, and is scheduled for completion by April 2019, at a cost of US$21.6 million. When completed it is expected to be the largest hybrid storage system in the world. Pictured with him: (L-R) are Seiji Kawamura (Chairman of JPS), Steven Looney (Vice-President & General Manager, Micro Grids and Distributed Generation for North America ABB), Dr. the Hon. Andrew Wheatley (Minister of Science, Energy and Technology), and Emanuel DaRosa (CEO – JPS).


TELECOMMUNICATIONS SECTOR

The telecommunications sector, as always, had

its fair share of developments with a number of

projects brought to completion.

ICT Survey Findings

One of the two major ICT surveys on which

we reported last year was completed during

the year. The survey, funded jointly by the OUR

and the Universal Service Fund and undertaken

by STATIN and the Mona School of Business,

apart from providing data that the OUR will use

to ful�l its International Telecommunications

Union’s information requirements, also provides

us with information on penetration, usage,

affordability, etc. within the ICT market. This

information will be useful to inform policy

recommendations and regulatory interventions.

Resulting from this survey a paper is being

prepared to provide recommendations on likely

barriers to broadband usage. The other survey,

to assess the extent of market competition, is

still in the information gathering phase and

has unfortunately been bedevilled by delays

particularly resulting from slow responses to

data requests and defects with the information

eventually supplied.

Additional Area Code and Ten Digit Dialling

The OUR projects that within another few

years, Jamaica will have exhausted numbers

under the current ‘876’ area code. To ensure

that we can meet the demand for numbers,

we have received another area code, ‘658’.

The most immediate impact on the consumer,

will be the introduction of 10-digit dialling, in

2018 May 31. With this new development,

Jamaica will be the only English-speaking

country in the Caribbean with two area codes

and 10-digit dialling. As reported elsewhere,

the OUR undertook signi�cant public education

and public consultation on this development to

assure a smooth transition.

Quality of Service Rules

Unfortunately the recommended quality of

service rules for the ICT sector did not complete

the Of�ce of the Parliamentary Counsel’s

drafting process before the end of the year. We

are optimistic that they will come into effect in

2018/2019.

Fixed Cost Termination Charges

We were able to issue a determination notice

which saw a lowering of the cost for terminating

calls on �xed networks during the year, albeit,

only after extended litigation. This follows a

determination on mobile termination charges

some years ago. Notably, one of the projects

on the Of�ce work plan for the 2018/2019 and

going into 2019/2020 is a further review of

mobile termination charges.

Development of Infrastructure-Sharing Rules

Work on the long standing project to develop

infrastructure sharing rules, another step

towards increasing the potential and prospect

for competition in the sector and reducing

duplication of scarce resources, was completed

during the year. The draft rules were sent to the

Ministry responsible for telecommunications

which will submit them to the Of�ce of the

Parliamentary Counsel for completion and

promulgation.

In addition to these highlighted activities,

the OUR also continued work on other ICT

related matters including: developing rules to

address unfair contract terms and to provide

for pecuniary penalties for breaches of the

Telecommunications Act, drafting policy

recommendations to aid the convergence of

emergency services on one coherent platform,

to make provisions for equality of access to ICT

services for PWDs and educating stakeholders

on the critical importance of timely collection,

proper treatment and reporting of ICT data.

We have also taken note of, and have begun

to take steps to address a number of emerging

issues, notably:

Improving Transparency in the Billing of Telecommunications Services

There was an increase in inquiries and complaints from customers about billing


issues. The complaints were primarily about mobile credit/plan depletion in general, and in particular, overcharges relating to data usage. As part of its response the OUR is exploring regulatory initiatives to allow users to better understand the implications of roaming and data usage, helping them to manage their usage of mobile services and reduce bill shock which occurs when a consumer receives a higher than expected bill or sees their prepaid credit deplete faster than expected.

We also propose to assess the procedures being followed by service providers for metering and billing and the incidence of unexpectedly high/incorrect bills as well as how roaming calls are

billed, to prevent ‘bill shock’. So we will be:

• Raising consumer awareness about using mobile phones; and

• Providing greater consumer protection through the requirement for more transparent charging.

It is encouraging, that at least one mobile company reported that it has put in place measures, which resulted in a drastic reduction in the number of complaints received regarding call credit depletion.

Assessment of the Transition from Legacy Networks to IP Based Networks

The transition from legacy networks to IP

based networks, which has already begun, can

have a profound impact on consumers and

businesses. Although some consumers and

businesses will voluntarily choose to migrate

to new services, others may be forced to

migrate to new technologies so that traditional

network resources (such as copper networks

and switches) may be de-commissioned. The

migration also has technical and economic

implications for the regulation of the sector.

We intend, in the course of �scal 2018/2019

to give attention to some of the legal, policy,

and technical issues which are likely to arise

from the transition and implement the requisite

mechanisms to ensure that the public interest

is preserved.

ELECTRICITY

The electricity sector is on par with the ICT sector in terms of the speed of change and the diversity of issues. Lique�ed natural gas, renewable energy, energy storage, distributive generation, smart meters, smart street lights and smart grid, are local buzz words. Indeed, the sector is in the maelstrom of disruptive technology. During 2018/2019 the OUR continued to be at the forefront of these developments.

New natural gas generating plants

During the year, the OUR played a pivotal role in reviewing the technical and commercial proposals for the development of the South Jamaica Power Company’s 190 MW and the Jamalco 94 MW cogeneration plants, both of which are now at different stages of construction.

Inaugural Natural Gas Conference

Last October Jamaica hosted its inaugural Natural Gas Conference. This was a collaborative effort between in the OUR and the Petroleum Corporation of Jamaica. Although the well-attended conference was positioned primarily as a public education initiative, it also proved to be a valuable opportunity for stakeholders to weigh in on what a policy and regulatory framework might look like for a nascent gas sector. We are grateful to our stakeholders and our partners, for the �nancial and other support which made the conference a resounding

success.

Energy Storage

Jamaica’s forays into renewables are generating

a buzz around the globe. Over 80 MW was

added to the grid in 2016, and the lowest

tender price for a Jamaican solar project, for

which ground was broken in 2017, are among

the indicators of our success. As anticipated,

and as is being demonstrated, along with the

tremendous bene�ts offered by renewable

energy plants, there is also the problem of

intermittency which poses signi�cant grid

stability challenges.

It is therefore noteworthy that during the

course of the year, the OUR gave its non-

objection for the Grid Operator to proceed with

the installation of a 23.5 MW hybrid storage

project, the largest such hybrid storage facility

in the world, to correct the variability impacts

of existing renewable plants, and to facilitate


more renewable projects in the system. The

groundbreaking for this project took place in

early 2018, and we expect the project to come

on line by the second quarter of 2019.

I wish to underscore that the OUR’s facilitation

of this project is another demonstration of its

commitment to provide feasible and economic

solutions to bene�t consumers, while ensuring

the security and reliability of the nation’s energy

supply.

Jamaica Private Power Company PPA Renewal

Since 1993, the Government of Jamaica has

adopted the Independent Power Producer

model for the expansion of the electricity

sector generating system. The Power Purchase

Agreement (PPA) signed between the Jamaica

Private Power Company (JPPC) and JPS for the

sale and purchase of net energy output and the

dependable capacity for 20 years from the 60

MW Complex, represented one of these �rst

moves.

That this policy has come of age, is demonstrated

by the fact that in 2017, the OUR approved the

renewal of the JPPC PPA for a period starting

from 2018 January 7 to 2024 December 31.

This was done at a tariff level that will facilitate:

continuing operation of the plant over the

renewal period, reduction in direct costs to

consumers of J$250 million, and affording the

opportunity for JPPC’s shareholders to earn a

fair return over the period. I submit that the

culmination of the JPPC’s PPA renewal not only

demonstrates the maturity of the PPA process

in Jamaica but also the successful integration

of independent power in the electricity system.

This marks a milestone in the history of the

electricity sector.

Other matters addressed in the sector include

the promulgation of a new meter testing

protocol which incidentally now extends

to cover meters in the water and sewerage

sector; completion of the audit of the Electricity

Ef�ciency Improvement Fund (EEIF), one of

the results of which is the identi�cation up to

2017 of some US$17 million in tax bene�ts

to be returned to electricity customers; and

preparatory and vital lead up work to the 2019

Tariff review. The latter includes the conduct of

studies on return on equity, productivity and

demand forecasts.

WATER AND SEWERAGE

Although the level of activities in the water and

sewerage sector was low-keyed, progress was

made on a number of fronts. I remain cognisant

of the critical importance of the sector, the

challenges it poses and the opportunities for

ef�ciencies and the enhancement of both

producer and consumer welfare.

Activities of small private water providers

Tariff applications were processed and decisions

issued in response to applications from three

small private water and sewerage licensees

during the year - Can-Cara Development

Limited, which provides water to residents in

Meadows of Irwin in St. James, and western

Spanish Town in St. Catherine; Landmark

Developers Limited, which provides sewerage

service to customers in Three Hills St. Mary; and

Runaway Bay Water Company, for sale of bulk

water. The length of time taken to conclude

these reviews, the iterative information

gathering process and the results of consultation

within the service areas underscored the need

to establish a standardised process for handling

such applications.

Consequently, as previously indicated it is

intended to engage stakeholders in �scal

We continue to pursue a vigorous programme of training and knowledge transfer to ensure that the institution remains resilient, nimble and future ready.


2018/2019 by way of consultation regarding

the approach to tariff setting for this group of

providers. Notably, we took the opportunity

provided by these applications to secure greater

commitment to quality of service and reporting

standards.

K-Factor Fund

The long outstanding � nancial and operational

audit of the NWC’s use of the K-Factor Fund

was completed. The result of the audit was

most unsatisfactory and indicates an urgent

need to review and tighten the operations of this programme. This will be a major focus during the up-coming year. By the same token, I am also keen to see the results of ongoing efforts by NWC to arrest water losses under its most recent corporate area programme.

Up Coming NWC Tariff Review

The NWC is allowed to apply to the OUR for a reset of its tariffs and standards, every � ve years. The last approved tariff was for 2013-2018 which means that an application is due for submission in 2018. During the review period we begun discussion with NWC urging them to start working on the issues that are likely to be most problematic.

GENERAL ADMINISTRATION

With the support of the non-full-time members of the Of� ce I have embarked on a number of initiatives to strengthen the operational activities of the OUR and to continue to

enhance its capacity. In this regard, we continue to pursue a vigorous programme of training and knowledge transfer to ensure that the institution remains resilient, nimble and future ready. Indeed I have indicated to staff that the OUR will, seek to ‘recruit the best, do the best by those it employs and require the best from them’.

We also remain committed to maintaining and achieving greater levels of excellence in all spheres of our endeavours. In that regard I am also pleased to report that the OUR not only maintained International Organisation of Standards (ISO) 9001:2008 Quality Management System certi� cation through the annual surveillance audit in July 2017 but also successfully transitioned to the ISO 9001:2015 Quality Management System standard.

We are also exercising great diligence to ensure that the regulatory fees collected from entities are used to good effect and that there is proper accounting including ensuring that where there are surpluses in any year, it is appropriately used for relevant regulatory activity.

CONCLUSION

It is said that “Regulators do not predict the future, they enable it” and this quote succinctly captures the way I consider that the OUR ought to approach its responsibilities. So, even while we look back with some satisfaction at the achievements of 2017/2018 we must ensure that a large part of such re� ection is to

observe and draw from the lessons, experience and intuitional capacity gained with a view to meeting the challenges and expectations of 2018/2019 and beyond.

Once again I would like to express my profound gratitude to my colleague-members of the Of� ce, all very occupied persons in their own professional and business endeavors but who still manage to give unstintingly of their time, skills and intellects to enhance the OUR’s work. Equally, the staff has put in another year of intense work to move the work plan forward. I am eternally grateful to them and continue to relish the responsibility of leading an excellent team.

As always, the issues in the regulated sectors will continue to prove to be a mix of, the common, the disparate, the complex, and the novel. I am con� dent, however that the OUR, at the level of the Of� ce and the professional staff, with our rich history and institutional endowment, is well equipped to continue to discharge its mandate and contribute to Jamaica’s development. Our stakeholders can therefore continue to expect and demand the best from us. We will rise to the occasion every time.

Ansord E. Hewitt

Director General


SUMMARY OF ACHIEVEMENTS

Telecommunications Sector

Category FY April 2017 – March 2018 FY April 2016 – March 2017

Determination Notices • Cost Model for Fixed Termination Rates – The Decision on Rates

• Jamaican Common Short Code Scheme

• Number Portability Administration Fees, 2017

• Local toll-free numbering scheme

• Estimate of the Weighted Average Cost of Capital for Telecommunications Carriers

• Number Portability Administration Fees, 2016

Directives • Directive to Cable & Wireless Jamaica Limited to undertake remedial measures to mitigate service interruption issues, to comply with the Office of Utilities Regulation’s (OUR) requests for the submission of information and to respond to recommendations

• Directive to Columbus Communications Jamaica Limited to comply with the OUR's request for information to facilitate its assessment of competition in the supply of electronic communication services in Jamaica

• Directive to Cable & Wireless Jamaica Limited to comply with the OUR's request for Information to facilitate its assessment of competition in the supply of electronic communication services in Jamaica

• Directive to Digicel (Jamaica) Limited to comply with the OUR's request for information to facilitate its assessment of competition in the supply of electronic communication services in Jamaica

• Directive to Cable & Wireless Jamaica Limited (collectively trading as FLOW) to comply with the Office of Utilities Regulation’s (OUR) request for the submission of information on access to ‘lit fibre’ owned by Columbus Communications Jamaica Limited and Cable & Wireless Jamaica Limited.

• Directive to Cable & Wireless Jamaica Limited to comply with the OUR's request for the submission of information in relation to the consultancy "assessment of competition in the supply of electronic communication services”.

• Directive to Cable & Wireless Jamaica Limited to comply with the OUR’s request for the submission of information in relation to the telecommunications market information requirements

KEY: FY: Financial Year




Quarterly Sector Reports • Telecommunications Market Information Report 2015 October – December

• Telecommunications Market Information Report 2016 January – March

• Telecommunications Market Information Report 2016 April – June

• Telecommunications Market Information Report 2016 July – September

• Telecommunications Market Information Report 2016 October – December

• Telecommunications Market Information Report 2017 January – March

• Telecommunications Market Information Report 2017 April - June

• Telecommunications Market Information Report 2017 July - September

• Telecommunications Market Information Report April - June 2015

• Telecommunications Market Information Report July – September 2015

Reconsiderations • Reconsideration of the Office’s Determination Notice: (2017/TEL/003/DET.001) “Cost Model for Fixed Termination Rates – The Decision on Rates – Public Version”

• None




Responses • Infrastructure Sharing: OUR’s Comments on Responses to Notice of Proposed Rulemaking

• Quality of Service Standards and Consumer Protection Guidelines for the Telecommunications Sector: OUR’s Response to Comments on Notice of Proposed Rulemaking

• Resolution of Interconnection Disputes in the Telecommunications Sector: OUR’s Comments on Responses to Notice of Proposed Rulemaking

Approval Document • RIO 6 Approval• Approval of RIO 6 Revised Tariff

Schedule

• None

Addendum • Reconsideration of the Office’s Decision: Determination Notice “Cost Model for Fixed Termination Rates – The Decision on Rates” – Final Decision - Addendum 1

• Consultancy for the development of guidelines related to unfair contract terms and the assessment of customer contracts in the telecommunications sector

Consultation Document • None • Estimate of the Weighted Average Cost of Capital for Telecommunications Carriers

• Cost Model for Fixed Termination Rates – Draft Model

Recommendations • None • Transfer of Control of Operations of Columbus Communications Jamaica Limited et.al to Liberty Global plc

• General Consumer Code of Practice for the Telecommunications Industry

• Interim Cost for Access to Emergency Services




Request for Proposals • None • Consultancy for the development of policy recommendations on enhanced access to emergency services in Jamaica

• Consultancy: For the Development of Guidelines Related to Unfair Contract Terms and the Assessment of Customer Contracts And For the Development of Pecuniary Penalty Regime for Offences against the Telecommunications Act and Regulations made under the Telecommunications Act

Notice of Proposed Rule Making • None • Infrastructure Sharing

Electricity Sector


Determination Notices • Jamaica Public Service Company Limited Annual Review 2017

• Jamaica Energy Partners Change in Law Claim

• Jamaica Public Service Company Limited Metering and Customer Information Systems Audit

• JPS's Grid-Scale Energy Storage Project: Business Case

• Jamaica Public Service Company Limited Annual Tariff Adjustment 2016

• Jamaica Public Service Company Limited Extraordinary Rate Review 2017


Electricity Sector


Directives • None • Direction and information requirements to South Jamaica Power Company Limited in connection with its amended and restated power purchase agreement with the Jamaica Public Service Company Limited dated as of 2016 December 22

Public Notice • Net Billing Energy Prices (July, August, September & November)

• Net Billing Energy Prices (October & December)

• Net Billing Energy Prices (January) 2018

• Net Billing Energy Prices (February) 2018

• None

Report • To Investigate the Electricity System Total Shutdown on 2016 August 27 - Report of the Outage Review Team

• Report on Investigation of Jamaica Public Service Company Limited Major System Failure, Power System Islandwide and Widespread Outage 2016 April 17 at 6:59 p.m.

Technical Document • Jamaica Electricity Grid Book of Codes • None

Addendum • None • Addendum to Determination Notice - Wigton Windfarm Limited II Energy Payment Rate Determination


Water and Sewerage SectorCategory FY April 2017 – March 2018 FY April 2016 – March 2017

Determination Notices • National Water Commission Annual Price Adjustment Mechanism and X-Factor Application

• Runaway Bay Water Company Limited (RBWC) - Bulk Water Rate to NWC

• Landmark Developers Limited Review of Rates 2017

• Can-Cara Development Limited: Water and Sewerage Rates

• Determination Notice - National Water Commission Mid- Tariff Review 2016

Directives • None • Directive to the National Water Commission to cease the application of the Late Payment Fee and the issuance of Multiple Bills in a Single Billing Cycle.

Request for Proposals • None • Consultancy Services for an Audit of the National Water Commission’s Billing and Metering System

Explanatory Document • None • Quality of Service Standards for the National Water Commission: Explanatory Document

Consultation Document • Proposal for Vulnerable Utility Customers to Opt-out of the Early Payment Incentive/Late Payment Fee programmes.

• None

Addendum • Directive to the National Water Commission to Cease the Application of the Late Payment Fee Aspect of the Payment Compliance Initiative and the Issuance of Multiple Bills in a Single Billing Cycle - Addendum


General RegulationCategory FY April 2017 – March 2018 FY April 2016 – March 2017

Notice of Proposed Rulemaking • Guidelines on the Resolution of Regulatory Disputes Between Licensees in Regulated Sectors

• None

Policy • Due Diligence Policy - Application for the Grant and Renewal of Licences.

• None

Rules • None • Meter Testing Administrative and Operational Protocol

Quarterly Performance Report • Quarterly Performance Report - 2017 January – March

• Quarterly Performance Report - 2017 April – June

• Quarterly Performance Report - 2017 October - December

• Quarterly Performance Report 2016 April – June

• Quarterly Performance Report - 2016 July – September

• Quarterly Performance Report - October to December 2016


THE EXECUTIVES

ANSORD E. HEWITTDirector General

MAURICE CHARVISDeputy Director General

HOPETON HERONDeputy Director General

SHANIQUE NUNESExecutive Assistant

DEPARTMENTALREPORTS

Consumer Affairs Offi cer, Shara Barnett (left), assists a consumer with registration at a Community Meeting at the OUR’s Parish Connections series in Trelawny on 2017 November 30.


DIANA CUMMINGSManager - Licensing & Regulatory Affairs

This department is responsible for the effective and ef� cient functioning of

the Of� ce, including its decision-making processes and its compliance with

internal and external procedures. The Secretary to the Of� ce, in consultation with

the Chairman and the Director General, sets the regulatory agenda and ensures

that matters before the Of� ce are dealt with expeditiously. The STTO is also

responsible for licence processing, the development of the Corporate Plan, and

the OUR’s external relations.

SECRETARY TO THE OFFICE (STTO)

AMBASSADOR PETER BLACK

Secretary to the Of� ce

CARLENE DUNBARLicensing Of� cer

THALIA MCPHERSONProject & Research Of� cer


CORPORATE BUSINESS PLAN

In accordance with the requirements of the Public Bodies Management and Accountability Act, the OUR’s Corporate Business Plan and budget were submitted to the Ministry of Finance and the Public Service as scheduled. The OUR endeavoured to complete activities within the timeframes outlined in the Plan. The achievements are highlighted in the various sector reports.

LICENCES

TELECOMMUNICATIONS SECTORThree service provider licences were issued in the telecommunications sector during the �scal year 2017/2018:

Company Licences Category Licences Codes New/Renewal

Telecomb Networks Limited Internet Service Provider ISP 1 (R)

S & B Communications Limited International Voice Services (Resale) IVSP 1 (R)

Internet Service Provider ISP 1 (R)


The Consumer and Public Affairs department has sought to ef� ciently administer

the consumer affairs regulatory function of the OUR and to effectively

monitor and evaluate the customer service performance of all regulated utilities.

In these capacities, the department develops and implements all approved public

education activities for the OUR, serves as the primary point of contact for the

general public, develops strategies and procedures for complaint resolution,

spearheads all mass public consultations and manages the public image of the

OUR.

CONSUMER AND PUBLIC AFFAIRS (CPA)

YVONNE NICHOLSONDirector, Consumer & Public Affairs

ELIZABETH BENNETT-MARSHPublic Education Specialist

COLLETTE GOODESpecialist, Consumer Affairs (Policy)

NAOMI WATKINSCoordinator, Consumer Affairs (Operations)


The period under review 2017, April 1 – 2018, March 31 saw the department sharpen its foci on our responsiveness to trends in consumer complaints. This has meant an increase in the number of Of�ce decisions/determinations redounding to the direct bene�t of consumers. Through the efforts of the Consumer Affairs Unit (CAU) and the compensatory mechanism of the Guaranteed Standards, some $144 million was credited to consumers. The department also continued the OUR’s engagement with consumers across Jamaica through our successful Parish Connection Series as well as our Stakeholder Engagement events to ramp up consumer awareness about ten-digit dialling and other regulatory initiatives.

CONSUMER AFFAIRS HIGHLIGHTS

Directives Issued to the National Water Commission (NWC)

The department was instrumental in effecting OUR Directives on 2017 March 31 for the NWC to cease the application of the Late Payment Fee (LPF) and desist from issuing multiple bills in a single billing period.

Allegations came to the OUR’s attention during the year that NWC had collected more than the $20 million monthly to which it was not entitled through late payment fees. NWC subsequently con�rmed that it was aware of the matter and that the issue/s which led to the

erroneous application of the fee were resolved. Nonetheless the OUR only approved resumption of the application of the LPF, effective 2017 July 1 after it was satis�ed of resolution and effective redress to customers.

The matter of the issuance of more than one bill in a single billing cycle was also addressed with the OUR directing that this should only be done on the basis of speci�c request for its approval.

Intervention in Digicel’s Decision to Implement a Prepaid Maintenance Fee

The department also led the OUR’s intervention when Digicel sought to impose a Prepaid Maintenance Fee (PMF) to its customers with a monthly spend of under J$50. The OUR’s primary basis for intervention was the apparent failure of Digicel to provide adequate noti�cation to its customers prior to the implementation of the PMF. In the end, Digicel did not proceed with the implementation of the PMF and provided rebates to all customers’ accounts to which the PMF had been applied.

Vulnerable customers (Persons with Disabilities and Pensioners) and the Early Payment Initiative/Late Payment Fee programme of the JPS and NWC

The department took the lead to open up a discussion with JPS and NWC about the imposition of the Late Payment Fee (LPF) aspect of the Early Payment Incentive/Late Payment

Fee (EPI/LPF) programme. This followed on our receipt of complaints from customers who disagreed with the programme on the basis that they felt that it was unfair, unreasonable and only served to bene�t the service providers. In its review of the complaints, the CAU recognized that vulnerable customers may be more signi�cantly impacted by the LPF aspect of the programme as it imposes an additional monthly charge that was not consumption-based. It was decided to consult with both service providers to explore the possibility of providing vulnerable customers with the choice to opt out of the EPI/LPF programme. By so doing, these vulnerable customers would not receive the EPI for early payment nor be charged the LPF. Consultation on this commenced towards the end of the �scal year.

Main Customer ConcernsAt 48% and 18% respectively, billing matters and service interruption continued to be the main reason persons contact the OUR. The nature of the billing contacts included: customers’ dispute of billed charges to their accounts, high consumption charges and concerns relating to estimated and retroactive billing. At 3% of total contacts, alleged breaches of the Guaranteed Standards, disconnection and equipment damage accounted for the next highest reasons for customer contact.

Consumer Appeals and ResolutionsThe CAU received three thousand eight hundred and seventy-six (3,876) contacts, one per cent less than the previous year. (Table 1).



Of these contacts 49 (or 1%) were accepted for investigation under the Appeals Process, 618 (or 16%) were resolved with the OUR’s immediate intervention while the remaining 3,209 (or 83%) were referred to respective service providers for resolution.

Of the forty-nine new appeals received, 26 related to services provided by the JPS, 22 were for the NWC while the remaining one related to private small water provider DEML. Twenty-eight (28) appeals remained unresolved (Table 2) up to 2017 March 31 and these had been carried forward from 2016/2017 to the new reporting period, bringing the number of appeals before the OUR for the year to seventy-seven (77). Fifty-six (56), representing 73%, of the 77 appeals that were investigated

during the period were resolved. This resolution rate is eleven percentage points lower than the previous year. Of those resolved, 7% were in favour of the customer and 80% were resolved in the utilities’ favour. The remaining 13% included: matters for which a compromise was reached, was mutually resolved or the appeals were withdrawn by the customer.

In relation to the established 65 working days to complete investigation of customers’ appeals, of the 77 appeals reviewed, 61% were completed within the timeline and 19% completed outside of the timeline. The remaining 20% is shared equally between open appeals that would not have or have exceeded the closure timeline.

Dr. Christine Hendricks (left), Executive Director of the Jamaica Council for Persons with Disabilities, exchanges words with Collette Goode (right), Specialist – Consumer Affairs (Policy) at the Director General’s Annual Stakeholder’s Engagement Session held at the Spanish Court Hotel on 2018 March 28. This year saw attendance of representatives of the disabled community.

Table 1: Annual Contacts Managed by Consumer Affairs Of� cers (2013 – 2018)

Service Providers 2017/2018 2016/ 2017 2015/2016 2014/2015 2013/2014

JPS 1,364 1,285 927 991 1,167

NWC 965 1,074 852 698 811

C&WJ (FLOW) 520 525 654 402* 253 *

Columbus Communications (FLOW) 485 439 225

Digicel 395 281 129 165 146

Others 147 314 121 101 100

Total 3,876 3,918 2,908 2,357 2,477*Only to LIME contacts.


Table 2: Appeals (2013 – 2018)

2017-2018 2016-2017 2015-2016 2014-2015 2013-2014

Appeals from previous periods 28 88 122 122 183

Appeals received during the

reporting period 49 95 88 146 102

Total appeals for reporting

period 77 183 210 268 285

Appeals resolved during

reporting period 56 153 122 146 154

Appeals resolution rate for

reporting period 73% 84% 58% 54% 54%

Of the 49 new appeals received, 43 were due to be closed by the end of the review period; in keeping with the established appeals timeline. Of the 43 appeals, 81% were completed within the established timeline; 9% completed outside of the timeline; 8% open and not completed within the timeline.

Public Consultations for Small Water and/or Sewerage Providers

The department organized tariff consultations for applications received from Can Cara Development Ltd. (CDL) and Landmark Developers Ltd. (LDL). The application from CDL was for an increase in rates of approximately 27% for water and 15% for sewerage for its customers in St. Catherine and Montego Bay. The application from LDL was for rates to be determined for sewerage service provided to Liberty Estates in St. Mary. The main issues raised by customers at the meetings related to: poor management of lift stations; service interruptions; disconnection of sewer mains; repairs, replacements and road restoration and customer service practices.

Figure 1


Beverley Green, Consumer Affairs Of� cer/ Project Manager for OUR’s Mystery Shopping Programme outlines the rationale behind the project on 2018 March 8 to utility providers as they gathered for the presentation of the � ndings of the research. The mystery shopping exercise was conducted across twenty (28) stores operated by JPS, NWC, FLOW and Digicel.

Kim Lee, Head of Department – Sponsorship, Retail and TV Marketing at FLOW, raises a point on the � ndings that were presented from the OUR Mystery Shopping Programme.

CDL and LDL were directed to develop and document processes and procedures for each of the issues raised. The providers were to submit all documents within six (6) months of their respective Determination Notices which took effect in 2018 February.

The OUR will monitor to ensure that both providers comply with the commitments they have documented.

Mystery Shopping Survey

Market Research Services Ltd. was commissioned to conduct a mystery shopping survey of the major regulated utility providers. The objectives were, inter alia to provide information on the in-store customer experience; ascertain the major areas of satisfaction and dissatisfaction with customer service and determine the level of satisfaction with the quality of customer service offered by the providers. The � ndings of the survey indicated that none of the utility service providers are delivering an above average in-store customer experience and that there was a 30% customer satisfaction gap.

Telecommunications provider FLOW topped the overall scores with 71%, with JPS following closely at 70%. Digicel and NWC attained 69% and 67% respectively.

Resulting from the � ndings of the survey, the OUR will consult with the service providers on implementing the following recommendations:• Conduct at least one training

exercise annually speci� c to customer service delivery. Additionally, service providers will be asked to provide updates on customer service training activities undertaken or to be conducted at quarterly meetings;

• Develop/review internal performance standards for measuring customer service delivery; and,

• Make their Terms and Conditions of Service readily accessible to customers via various channels.

Credits & Compensation

Utility companies paid out over one hundred and forty-four million dollars ($144 million) to consumers, either resulting from direct OUR’s intervention or as compensation for breaches of the Guaranteed Standards. With respect to the Guaranteed Standards, JPS committed a total of 68,930 breaches which attracted potential compensation of approximately $140.1 million which was all paid out through automatic compensation. The NWC committed a total of 2,341 breaches which attracted potential compensation of approximately $7.5 million. Actual payments amounted to approximately $3.72 million, representing 50% of total


JODIAN COULTMANConsumer Affairs Of� cer

BEVERLEY GREENConsumer Affairs Of� cer

Public Education Specialist, Elizabeth Bennett Marsh, poses with students from the St. Andrew High School for Girls who attended the Kingston Schools’ Connections on 2018 February 21.

potential amounts. The 50% not paid out re� ects the fact that the required claim forms were not submitted. Just over one million dollars was secured for utility customers resulting from investigations of customers’ appeals. Of the sum secured, NWC accounted for 61% while the JPS accounted for 37%. The remaining 2% was shared equally between Digicel and C&WJ-FLOW.

PUBLIC AFFAIRS HIGHLIGHTS

Public affairs activities were centred around outreach engagements, public education on Jamaica’s new area code and the introduction of 10-digit dialling come 2018 May 31, and ensuring timely responses to queries from the media and utility customers. The public was also kept abreast of the work of the OUR

through regular news releases; weekly radio programmes, website, and social media pages.

Parish Connections

The OUR concluded its Parish Connections outreach series in 2018 February, with events in St. James, St. Ann, Trelawny and Kingston & St. Andrew. Started in 2015 March, the series aimed to facilitate an interactive communications channel and to re-establish continuing utility consumer and stakeholder dialogue for a two way � ow of information between utility customers and the OUR. It also allowed utility companies to share information on projects and development of issues with consumers on a planned and consistent basis. Activities undertaken include community meetings, student engagements, and expos. An innovative feature of the programme was

that the Consumer Affairs Commission (CAC) and the major utility providers joined with the OUR to make presentations to students, residents and business interests in various communities, and to � eld questions, as part of the engagement process. Thousands of consumers have been reached as the OUR engaged utility customers about their rights and responsibilities, providing guidance and advice and addressing concerns about their service.

The feedback from customers at these events has been invaluable to the utility companies as the face-to-face interaction allowed them to hear � rst-hand customer concerns. The service providers have indicated that the series was good for customer education – with the objective voice of the OUR helping customers to appreciate their responsibilities as well as those of the utility companies.


OUR staff members are always happy to share memorabilia with consumers when they travel on the road. Above Liana Haffenden (Administrative Assistant) as she hands a gift to a consumer in Trelawny in December 2017.

Ilsa DuVerney, Founder/ CEO of Caribbean Centre for Organisation Development Excellence Limited (CARI-CODE), conducts a workshop at OUR’s inaugural Symposium on Utilities Customer Service and Quality of Service Improvement (QoS) held 2017 October 31 at the Jamaica Pegasus Hotel.

Members of the audience at the Jamaica Natural Gas Conference held 2017 October 4-6 in Kingston at the Jamaica Pegasus Hotel.

One telecommunications company reported that especially in rural parishes, they were able to provide better signal strength and service reliability to new and emerging communities based on feedback and recommendations from customers who offered more reliable information as to population density and growing demand for data over voice services. They also reported that they developed more direct relationships with customers who lived in remote areas where there is frequent vandalism and theft of equipment at cell sites.

Quality of Service Symposium

Customer service issues and the management of appeals are among the signi�cant tasks of the OUR. During the year OUR hosted a Quality of Service Symposium with all the major, as well

as some small utility providers, the �rst such activity.

One of the main objectives of the symposium was to assist with the improvement in the quality of customer service and get inputs for the development of a Codes of Practice for complaints handling and customer service. The event was well supported by representatives of the major and small utility companies who manage customer service portfolios.

Natural Gas Conference

The department was involved in the planning and execution of Jamaica’s �rst ever Natural Gas Conference 2017 October 4-6 organized with the Petroleum Corporation of Jamaica (PCJ). The inaugural conference was well attended by

local and overseas companies who were keen to learn about business opportunities available in the gas industry in Jamaica. There were also a wide range of presentations and discussions surrounding the development of the natural gas sector. The conference culminated with a tour of the Bogue power plant and the New Fortress storage and regasi�cation sites in Montego Bay, St. James.

Area Code and 10-Digit Dialling

In order to ensure a smooth transition to ten digit dialling and the adoption of the new area code, ‘658’, a Consumer and Awareness Taskforce (CATF), chaired by Director, CPA and including telecommunications operators as well as CAC and the Consumer Advisory Committee on Utilities (CACU), was formed. The CATF


Figure 4

Figure 3

Figure 2©

actively embarked on media and outreach events involving the business community in Kingston, St. James, and Manchester, as well as with representatives of Government Ministries and agencies. The OUR worked with the two major telecommunications companies to ensure that their customers are fully apprised of the changes to expect and be prepared to offer assistance to ensure a smooth transition.

Social Media

As the OUR continued to increase its reach via social media, we added an Instagram account enabling us to provide updates to stakeholders on this platform as well as Facebook, Twitter, and LinkedIn. Facebook and Twitter however remains the most popular social media by which stakeholders engage the OUR.

Statistics obtained from the OUR’s page for the 2017 April 1 – 2018 March 31 period revealed that the monthly average reach was 22,913. Our reach peaked at over 111,000 in 2017 August.

The OUR’s Twitter page attained 20,462 monthly average viewership, peaking at over 21,000 in 2017 August. Twitter followers increased by 30.3%.

The OUR’s LinkedIn account continues to register a steady increase in the number of connections, increasing by 56% between 2017 April 1 and 2018 March 31.

Online Consumer Report

The OUR continues to update stakeholders on its latest projects and decisions, through its bi-monthly electronic newsletter, the Online Consumer Report (OCR). The OCR is distributed via email to customers in the OUR’s public education database.

Mass Media

The OUR continues to have a regular presence in the media to keep stakeholders updated on its work with the main channel used being radio. The weekly � ve-minute feature Inside the OUR continues to be aired on RJR 94 FM and IRIE FM

OURIC (Of� ce of Utilities Regulation Information Centre)

OURIC is the only specialised library of its kind in the region, boasting a wide collection of materials pertaining to the utility sectors. It also contains historical and current materials produced by the OUR, including documents on its major decisions since its inception in 1997. In the upcoming year, OURIC will expand its Online Public Access Catalogue (OPAC) through which members of the public can view the available catalogue of materials. There will also be a renewed thrust to inform secondary and tertiary educational institutions about the OURIC catalogue and how these resources can assist in research for projects and theses.


GORDON BROWNCoordinator, Public Affairs

SHARA BARNETTConsumer Affairs Of� cer

JADE-ANNE JAMESConsumer Affairs Of� cer

OUTLOOK

The OUR will engage in other activities to further strengthen our efforts to protect the interest of consumers, namely: the completion of consultations towards ensuring equivalence for utility consumers within the disabled community and the establishment of standards for call centres for NWC and JPS. We will also continue our public education campaign on 10-digit dialling.

A live radio programme, ‘Call the OUR’, to be aired on RJR 94 FM’s Hotline programme will begin in 2018 April. This half-hour programme will facilitate interaction with the public, as members of the OUR’s Consumer Affairs Unit will � eld calls regarding services provided by the utility companies regulated by the OUR. We will re-design the OUR’s website, a vital

component in the regulator’s corporate communications and we will be hosting several meetings across the island as part of public consultation on the NWC Tariff Review application.

An anti-theft radio and print media campaign ‘Do The Right Thing’ will be launched in 2018 April to shed light on the growing problem of

theft, which has signi� cantly affected the water, electricity and telecommunications sectors in Jamaica.

We will be implementing measures to further strengthen our presence on social media amidst the growing use of these platforms by utility customers.

LIANA HAFFENDEN

Administrative Assistant

The department develops and implements all approved public education activities for the OUR, serves as the primary point of contact for the general public, develops strategies and procedures for complaint resolution, spearheads all mass public consultations and manages the public image of the OUR.

Regulatory issues addressed during 2017/2018 were wide ranging and

challenging across all sectors.

The principal activities for the electricity sector included:

• The extension of Jamaica Private Power Company’s (JPPC) Power Purchase

Agreement (PPA) which will see it selling electricity to the grid for another

seven (7) years;

• Approval for the installation of a 24.5MW Grid-Scale Energy Storage (ES)

facility by JPS;

REGULATION, POLICY, MONITORING AND

ENFORCEMENT (RPME)

CEDRIC WILSONDirector, RPME

EVONA CHANNERManager - Regulation & Policy: ICT

COURTNEY FRANCISManager - Engineering & Technical Analysis

PETER JOHNSONManager - Monitoring & Enforcement

WINSTON ROBOTHAMManager - Regulation & Policy: Electricity, Water

& Sewerage


• Approval of re-powering of JPS gas turbine

(GT11) plant;

• Updating and expansion of the Meter

testing administrative and operational

Protocol for the electricity and water sectors

in Jamaica;

• Audit of the Electricity Ef�ciency

Improvement Fund (EEIF);

• Monitoring the implementation of Smart

LED Streetlight Programme;

• JPS Annual Tariff Adjustment 2017; and

• Preparation for the 2019 rate review.

For the telecommunication sector, the major

initiatives included:

• Completion of ICT Usage and Adoption

Survey;

• Continued work on development of models

to determine economic cost of �xed and

mobile termination;

• Work in relation to the assessment of

competition in the supply of electronic

communication services;

• Advancing the work on the Development

of Unfair Contract Terms Guidelines and

a Pecuniary Penalty Regime under the

Telecommunications Act;

• Development of Infrastructure-Sharing

Rules;

• Examination of the equivalence in access

and choice for persons with disabilities;

• Development of common short codes;

• Area Code Relief planning and

implementation;

• Policy recommendations on enhanced

access to emergency services; and

• The hosting of an ICT Indicators Workshop.

Regulatory activities and initiatives in the water/

sewerage sector included:

• Review and issuing a decision on Runaway

Bay Water Company bulk water rate tariff

application;

• The issuance of Can-Cara Development

Limited Water and Sewerage Rate

Determination Notice;

• The completion of Landmark Developers

Limited �rst Tariff Determination Notice on

sewerage rates;

• Review of NWC’s J$24 billion bond-debt

re�nancing proposal;

• Review of NWC’s proposed Public Private

Partnership arrangement to fund the Rio

Cobre water treatment plant;

• Review and approval of the two private

water service providers and NWC’s Annual

Price Adjustment Mechanisms (ANPAM);

and

• Audits of the K-factor account.


SECTOR DETAILS

ELECTRICITY

Extension of JPPC Power Purchase Agreement (PPA)

On 1994 October 10 Jamaica Private Power

Company’s and JPS entered into a PPA for the

sale and purchase of net energy output and

the dependable capacity to JPS for twenty (20)

years (ending 2018 January) from a 60 MW

slow speed diesel power plant. The output

from this plant amounted to about 430 GWh of

electrical energy annually, approximately 10%

of total energy supplied to the JPS grid in 2016

and 7.5% of the system � rm net generating

capacity.

In keeping with the terms of its � rst PPA, JPPC

had indicated from 2012 February its intention

to seek an extension. On 2017 February 7,

they formally submitted their proposal entitled,

“PPA Extension Proposal, OUR Information

Requirement, February 2017”.The OUR

evaluated the proposal to determine the

feasibility of extension, the level of tariff and the

duration of the PPA. At the end of negotiations

the agreement was renewed on the OUR’s

approval for 2018 January 7 - 2024 December

31 based on lower tariff levels.

Approval for the Installation of 24.5 MW Grid-Scale Energy Storage (ES) facility

In 2017 April, JPS submitted to the OUR for its

review and non-objection, the JPS’ Grid-Scale

Energy Storage Project Business Case Proposal,

which sets out JPS’ intention to implement an

energy storage (ES) project.

The operability of the Jamaican electricity system

is more and more being affected by increased

penetration of intermittent generation,

decreasing levels of inertia, inadequacy of

ancillary service resources and other system

operating constraints. These issues and defects,

have in some instances had undesirable effects

including unscheduled supply interruptions

to customers. Changing demand and supply

patterns, response limitations of existing

generation facilities and projected increases in

variable renewable energy (VRE) generation,

(mainly wind and solar) in energy supply mix

going forward, will likely exacerbate the

situation if it is not urgently addressed. An

ES facility on the grid entails the deployment

of a fast responding, highly accurate energy

storage system that can react automatically

to frequency deviations and provide spinning

reserve support to the power system.

The OUR therefore welcomed JPS’ initiative.

JPS presented several proposals, but the ES

project proposal approved is designed around

a 24.5 MW grid-scale hybrid energy storage

system (HESS). This HESS con� guration is

comprised of a 21.5MW/16.6MWh Lithium Ion

(Li-ion) battery storage and 3MW of low-speed

� ywheels, to be installed at the JPS Hunts Bay


sub-station and interconnected to the system via

a 69kV/24kV, 25/33MVA step-up transformer.

Based on the proposal, the ES project should

deliver three crucial services to the system,

namely frequency regulation; spinning reserve

support, and low voltage ride through (LVRT)

capability. The project completion date was

set initially set for 2018 December but JPS

has sought and received an extension to 2019

March.

Approval for the Repowering of GT11

In 2017 February JPS alerted the OUR to the

fact that it was faced with an operational risk

having discovered a number of cracks on the

Old Harbour Unit 2 (OH#2) turbine rotor during

the last major overhaul in 2016. In its efforts

to manage the risk associated with a potential

failure of OH Unit #2, JPS proposed two options:

• Option A: To extend the life of the OH Unit

#2 by effecting repairs to the known defect

on the turbine; and

• Option B: To install bridge capacity of 40

MW to cover the projected generation

shortfall that may result from the forced

outage of OH Unit #2 until the planned

190 MW CCGT plant is commissioned.

Following a more detailed inspection in 2017

April, JPS revealed that the initial � ndings

regarding OH Unit #2 may have overstated the

extent of cracks. This implied a downgrading

of the potential operational risks. Subsequently,

JPS posited that the repair and return to service

of Bogue GT#11 (gas turbine unit located at

Bogue Power Station) was a superior approach

to the previous options proposed, since it would

be less expensive and would effectively address

the risk.

The Of� ce evaluated the Bogue GT#11

repowering option and concluded that, in the

context of the revised risk assessment, it was

indeed the better choice. The assessment was

based on the OUR’s simulations of the plant’s

behaviour within the framework of the overall

system network. The capital cost associated

would be approximately US$13.5M – US$14.7M

and the project had a planned completion date

of 2018 March.

Upgrade and Expansion of the Meter Testing Protocol for the Electricity and Water Sectors

As was the case in 2005 when the electricity

meter testing protocol for Jamaica was

formalized by the development of the

document– “The Meter Testing Administrative

and Operational Protocol for the Electricity

and Water Sectors in Jamaica”, the OUR in

collaboration with the Bureau of Standards

Jamaica (BSJ) through a consultative process

with stakeholders, updated expanded and

modernised the protocol. Initially, the scope

of the review of the Electricity Meter Testing

Protocol, 2005 was limited to electricity revenue

meters. However, during the process, the

decision was taken to incorporate provisions for

the administration and testing of water meters.

The OUR is empowered to, among other

things, take necessary measures to protect the

interest of consumers in relation to the supply

of a prescribed utility service. This contemplates

prescribing the measurement parameters and

the minimum standards of quality and accuracy,

and providing for the inspection and testing of

any equipment used in connection with the

prescribed utility services in Jamaica.

The new Meter Testing Protocol, 2017 was

developed in an open, transparent and

collaborative process incorporating international

best practices and prudent utility practice. It is

designed to create an appropriate and stable

framework for the veri� cation and testing of

existing and future utility revenue meters used

in the Jamaican electricity and water sectors. It

was published in the Jamaica Gazette on 2017

October 13 and became effective on 2017

October 17.

Audit of the Electricity Ef� ciency Improvement Fund (EEIF)

The EEIF approved in the OUR 2009-2014

Determination Notice and further approved for

continuation by the Of� ce in its 2014 – 2019

Determination Notice was set to undergo an


audit. The primary aim of the EEIF was to provide

a � nancial mechanism through which loss

reduction strategies may receive supplemental

� nancing to the capital expenditures directly

related to the implementation of the Advanced

Metering Infrastructure ("AMI") and other

approved loss reduction and revenue assurance

technologies.

In 2017 the OUR engaged Lummus International

Consultants Inc. to carry out the exercise which

was completed 2017 August 30.

The main � ndings were that:

a) The programme did not achieve its desired

effect of signi� cantly reducing non-technical

losses;

b) There were no clear measures of performance

established for the EEIF;

c) JPS was an early adopter of Residential AMI

technology and it encountered signi� cant

challenges with the equipment;

d) Residential AMI penetration was insuf� cient

to achieve the loss target set by JPS;

e) JPS had not credited back to the EEIF any tax

bene� ts or interest. Consequently at the end

of 2016 JPS owed the fund approximately

US$17.4M;

f) Fund was not ring-fenced to ensure the

achievement of its objectives; and

g) Opportunities for a joint OUR/JPS

collaboration were not fully utilized.

Given the � ndings of the audit the Of� ce took

the decision in the JPS Annual Review 2017 &

Extraordinary Rate Review Determination

Notice to terminate the EEIF. It was also

stipulated in the determination that JPS would

be required to repay its liabilities to the EEIF.

Smart LED Streetlight Programme

Arising from an agreement between the

government of Jamaica and JPS, and pursuant to

the Electricity Licence, 2016, JPS has embarked

on a Smart LED Streetlight Programme (SSP).

This programme will see the replacement of the

existing stock of primarily High Pressure Sodium

(HPS) and mercury vapour streetlights with

more energy ef� cient Light Emitting Diode (LED)

luminaires. In addition, the LED streetlights will

be based on a smart grid infrastructure designed

in line with international best practices and this

is expected to contribute to the modernisation

of the electricity grid. Expected bene� ts to be

derived from the Smart Streetlight Programme

include:


GARFIELD BRYANSenior Utility Analyst

SASHANA MILLER Senior Regulatory Analyst

MARSHA MINOTTSenior Utility Analyst

1New is in reference only to Rate 70 customers. These are being transferred from rate 40 and rate 50 classes and they are customers whose peak demand at a single location is at, or above, 2MVA. The 10% average reduction is the comparison of the rates they were paying in rate classes 40 and 50 to the rate they are now enjoying in rate class 70.

• A more affordable street light service that

will result in savings to the GOJ;

• Scope for further energy savings associated

with the � ne-tuning of the smart technology

that can facilitate the dimming of lights;

• A reliable streetlight service based on the

communication features of the smart

technology, and

• Scope for a control centre that facilitates

the effective monitoring and management

of the street light system.

The SSP was designed to see the roll-out and

replacement of 105,000 streetlights over 2017

– 2019/20. The programme is expected to cost

approximately US$38.9M. In 2017, 36,400 LED

streetlights were installed by JPS at a cost of

almost US$12.0M.

Consistent with a proposal from the Minister of

Energy, Science and Technology (MSET) and the

Electricity Licence, 2016, the OUR ruled in the

JPS Annual Review 2017 & Extraordinary

Rate Review Determination Notice that a

System Bene� t Fund (SBF) should be establish

to � nance the capital expenditure associated

with the SSP. Initially, the SBF is to be based

on an annual in� ow of US$5M over the period

2017/2018 and will be � nanced by way of JPS’

liability to the EEIF which was terminated by the

OUR in 2017 September. The OUR continues

to monitor the roll-out of the SSP to ensure its

ef� cient and timely implementation.

JPS Annual Tariff Adjustment: 2017-2018

In 2017 May JPS submitted its application to the

OUR for the annual review of Non-Fuel Based

Revenue, and a request for an extraordinary

rate review, in its document.

While the annual review application addressed

the elements captured in the performance-based

rate mechanism of tariff adjustment formula,

the extraordinary rate review component of the

application sought a J$973.4 million increase

in the company’s revenue requirement for the

recovery of returns on the Current Portion Of

Long Term Debt (CPLTD). JPS posited that the

changes in its licence which came into effect

in 2016 July paved the way for this recovery. In

its claim, JPS proposes the recovery of J$336.7

million in respect of unrecovered CPLTD returns

in 2016 and another J$636.7 million for 2017.

In response to JPS’ application, the Of� ce by

Determination Notice (2017/ELE/006DET.003)

issued on 2017, August 31 determined that:

a) J$336.7 million of the Extraordinary Review

claim pertaining to unrecovered CPLTD

returns in 2016 could not be accepted

because of the retrospective;

b) J$636.7 million in respect of the

Extraordinary Review claim pertaining to

the 2017 CPLTD was valid since it accords

with the forward-looking approach; and

c) The average tariff (inclusive of the 2017

CPLTD adjustment) would be reduced by

1.8%.

The average bill impact across all rate classes

were:

• Typical Rate 10 customer = -1.6% (Decrease)


• Typical Rate 40 customer = 2.0% (Decrease)



- *New1

In addition to the adjustment to JPS’ non-fuel

tariff, the Of� ce determined that on the fuel

side the generating heat rate target was to be

lowered from 11, 620 kJ/kWh to 11, 450 kJ/

kWh. This change in the heat rate target calls

for greater ef� ciency on the part of JPS in its

generation of electricity.

2019 Rate Review Preparations

Unlike all previous rate reviews, the 2019

exercise will be based on a revenue cap rather

than a price cap methodology. This change in


the tariff methodology is one of the cardinal

features of the JPS Electricity Licence, 2016.

For both the regulator and the regulated,

therefore, the 2019 � ve (5) year rate review will

be uncharted territory.

In this context, the OUR embarked on activities

aimed at studying critical elements of the tariff

and building internal capacity. From 2018

October – 2018 February, the OUR with the

support of funds from the MSET/World Bank

and the CDB embarked on three (3) studies

intended to inform the 2019 rate review

process:

1. The Rate of Return (ROE) on Equity

2. The Demand Forecast Model

3. The Productivity target methodology

In addition, the OUR with sponsorship from

the CDB, USAID-CARCEP and the Canadian

High Commission hosted two (2) workshops

that covered topics such as the business plan

framework in the electricity sector, accounts

separation, distributed generation, electricity

vehicles and energy storage technologies.

The � rst was held in 2017 September and the

second, which had participants from across the

Caribbean, was held in 2018 February.

Electricity System Performance Indicators

JPS reported a customer base of six hundred and

forty thousand, � ve hundred and eighty nine

(640,589) including residential, commercial and

industrial consumers at the end of 2017. Of

this number 89.35% were said to be residential

customers.

The highest peak demand registered on the system during the year was 666.70 MW. Correspondingly, annual system net generation was 4,360.57 GWh, translating to an average annual system load factor of approximately 75%. Annual electricity sales recorded was 3,205.45 GWh, representing a growth rate of approximately 0.86%, when compared to 2016.

System energy losses computed on a 12-month running average basis up to the end of December 2017 accounted for approximately 26.45% of net system generation. According to JPS’ system loss spectrum, an estimated 8.6% is considered to be of a technical nature while the remainder is attributed to non-technical energy losses.

Similar to the performance recorded for 2016,


NAKESHA ALLENAnalyst - Telecommunications

FAY SAMUELSAnalyst - Telecommunications

GORDON SWABYTelecommunications Engineer

there has been signs of improvement in the annual system net generation for 2017. With a growth rate of approximately 2.22% over that which was recorded for 2016, this performance continues a trend beginning in 2014 for this indicator. Annual electricity sales performed credibly well in 2017 and the 12-month rolling average for system losses indicates a slight improvement over that which was recorded for 2016 (Table 1).

With regard to system ef� ciency, average system heat rate continued its downward trend in 2017, recording its minimum at 8,435 kJ/kWh and a year’s average of 9,089 kJ/kWh. Increased electricity energy from renewable plants, and a full year’s operation of the Bogue Combine Cycle (BCC) plant (which was recently recon� gured to operate on natural gas (NG)) are a few of the contributing factors that have in� uenced this performance.JPS’ thermal annual heat rate average also bene� ted from the performances of the BCC, with a reported average of 11, 331 kJ/kWh, re� ecting an improved performance compared to 2016.

As oil prices increased steadily in the global markets for 2017, we have observed its effects on the monthly Fuel & IPP charges billed to the electricity customers. Following a year which recorded the lowest monthly Fuel & IPP charge within the last decade, the 2017 average monthly Fuel & IPP charge of 14.28 US cents/kWh, represents an increase of more than 43% of the average recorded in 2016.

JPS’ customer base has a growth rate of 1.62% between 2017 January and December. A signi� cant portion of that increase was attributed the Rate 10 customer class.

As shown in Table 2 and Figure 1, the monthly system net generation and electricity sales experienced a slight variation over 2017 April to 2018 March with maximum energy production of 394,047 MWh recorded for 2017 July. Similarly, electricity sales replicated a similar behaviour, and therefore in 2017 July, 289,336 MWh was recorded as the highest electricity sales over the said period. This is a consistent trend over the year, where July usually records the highest level of electricity sales and net generation, and 2017, July’s net generation performance was the highest ever registered on the system.

Table 2: System Performance Indicators for the Period 2017 April – 2018 March

Mth-YrNet Gen (MWh)

Sales (MWh)

Peak JPS Customer

Count

Avg. SystemHeat Rate(kJ/kWh)

JPS Thermal Heat Rate (kJ/kWh)

Fuel & IPP Charge

(Usc/kWh)

Short-Run Avoided

Cost (USc/kWh)

Apr-17 354,797 260,880 641.3 633,876 8,907 11,081 12.83 8.19

May-17 368,875 271,185 644.4 635,499 8,750 11,134 13.09 8.01

Jun-17 369,169 271,494 656.1 636,496 8,435 11,227 13.08 7.80

Jul-17 394,047 289,336 665.9 637,592 9,175 11,475 12.69 8.51

Aug-17 388,263 285,192 654.6 638,408 9,380 12,109 14.13 9.40

Sep-17 372,823 274,330 666.7 639,947 9,569 11,628 15.17 9.47

Oct-17 370,159 273,022 660.3 640,855 8,959 11,281 14.88 9.26

Nov-17 353,501 260,032 634.5 641,963 9,110 11,191 16.12 9.66

Dec-17 359,975 264,754 635.8 642,946 9,008 11,360 16.34 10.24

Jan-18 354,119 259,666 617.6 643,481 8,945 11,208 15.98 9.45

Feb-18 317,473 233,259 609.6 644,969 8,979 11,472 17.63 10.12

Mar-18 357,673 262,893 626.4 646,803 9,280 11,079 14.70 10.83

JPS Customer Base as at 2017 December

RATE 10 RATE 20 RATE 40 RATE 50 RATE 60 RATE 70 OTHER TOTAL 572,337 65,799 1,814 139 475 23 2 640,589

Source: JPS’ annual Data Set

Table1: Annual System Performance Data 2009-2017

YearNo. of

Customers

Net Gen

(GWh)

Sales

(GWh)

Peak

Demand

(MW)

System

Losses

(%)

Avg. System

Heat Rate

(kJ/kWh)

Avg. Fuel &

IPP Charge

(US cents/

kWh)

2009 584,207 4,213.98 3,203.88 644.4 23.98 10,167 14.688

2010 570,830 4,137.35 3,187.49 638.3 22.95 10,183 17.814

2011 575,786 4,136.88 3,215.99 617.7 22.26 10,111 24.474

2012 595,977 4,135.92 3,133.97 635.8 24.22 9,965 25.040

2013 606,654 4,141.64 3,069.69 625.6 25.87 9,884 24.472

2014 594,196 4,112.13 3,016.12 624.6 26.65 9,624 22.742

2015 599,530 4,209.32 3,071.35 640.0 27.03 9,641 12.262

2016 628,966 4,343.81 3,177.96 655.8 26.84 9,567 9.937

2017 642,946 4,360.57 3,205.45 666.7 26.45 9,089 14.284


System peak demand for the 12-month period showed signi� cant improvements as well, recording the highest monthly peak demand of 666.7 MW, in the month of 2017 September. As indicated in Table 1 the annual system peak demand has signi� cantly grown over the last four years and 2017 performance signi� es the highest it has ever been. Notably, � gures in Table 2, indicates that four (4) of the other months, in the period, registered peak demand greater than 650 MWs.

Over the reporting period, the monthly system losses as a percentage of system net generation showed signs of stability following a similar trend to that which was observed for the last reporting period. As illustrated by Figure 2, there were no signi� cant variation, given that the monthly system losses over the period ranged between 26.24% and 26.67%.

As it relates to the system losses target, the effective losses target went down during the reported period as a result of JPS’ performance against the respective losses targets that were determined in the last annual tariff review. In accordance with the relevant provisions of the Electricity Licence 2016, system losses are now broken out into three categories:

a) Technical losses;

b) The aspect of non-technical losses that are within the control of JPS; and

c) The aspect of non-technical losses that are not totally within the control of JPS.

Table 3 presents JPS’ performance against the targets that were set in the last tariff annual determination.

System loss is no longer applicable as a fuel ef� ciency mechanism, but its application still has an impact on JPS’ annual revenue target. Exhibit 1 of the Electricity Licence 2016, determines how these targets are simulated against JPS’ performance as well as how such results are applied to JPS’ revenue target.

As shown in Figure 3, the system heat rate performed noticeably well over the reporting period (2017 April – 2018 March), averaging 9,041 kJ/kWh which represents a 3.05% reduction when compared to the previous period. JPS’ thermal heat rate, which forms part of the effective fuel rate adjustment mechanism, performed fairly well against the determined targets that were applicable during the reporting period. JPS’ thermal heat rate out-performed the targets nine (9) out of the twelve (12) months within the period. A major

Figure 1: Monthly System Net Generation, Sales and Peak Demand (2017 April – 2018 March)

Figure 2: Actual System Losses versus Target – 2017 April to 2018 March

Table 3: JPS’ Performance against the Respective Targets

System Losses: Actual and Target

Component Symbol2017-2018

Target Actual

Technical Losses (TL) Ya 8.00% 8.60%

JPS Non-technical Losses (Direct)- JNTL Yb 3.30% 6.63%

General Non-technical Losses (Partial) - GNTL Yc 9.70% 11.22%

Responsibility Factor RF 20% 20%

Figure 3: Heat Rate Performance - April 2016 to March 2017


force outage on one of the units at the BCC facility and a scheduled planned outage at the Rockfort station, were two of the major reasons JPS did not meet its targets during the reporting period.

The average JPS’ thermal heat rate was 11,354 kJ/kWh; this is 0.23% worse off, than the average performance reported for the previous period. Their overall performance however was quite encouraging, as they successfully performed under the determined heat rate target for majority of the period.

The OUR’s 2014-2019 JPS Tariff Determination Notice, determined that the heat rate ef� ciency mechanism captured in the fuel rate pass through mechanism, should only consider setting a target for JPS thermal units. According to the relevant sections, under Schedule 3 of the Electricity Licence 2016, JPS is entitled to an annual tariff review where targets and other relevant parameters are reassessed and further determined by the Of� ce. This normally takes place between May and September each year within a tariff period (2014-2019). As Table 4 depicts, 2017 April to 2017 August, the heat rate target was 11,620 kJ/kWh which was determined by the Of� ce in JPS 2016-2017 Annual Tariff Review Determination Notice.

The remaining months within this reporting period, illustrate a target of 11,450 kJ/kWh, as was determined by the Of� ce in JPS 2017-2018 Annual Tariff Review Determination Notice.

Fuel and IPP charge recorded a gradual increase from 2017 July. The movement in the monthly

Fuel & IPP charge is attributed to variations in monthly fuel prices and electricity sale volumes. However, the Fuel & IPP charge is largely in� uenced by the events in the international oil market, which dictate the movement of the world’s oil prices. Notably, the spike recorded for 2018 February was largely attributed to the fall off in electricity sales as well as the addition of some IPP surcharge.

Similar to the Fuel & IPP charge, the Short-Run Avoided Cost (SAC), the generation tariff used for billing the energy supplied to the grid by net billing customers also exhibited an increasing trend over the same period. The movement in the monthly SAC is attributed to variations in monthly fuel prices as well as Net Energy Output (NEO) from the participating facilities relative to the total system net generation. As with Fuel and IPP charges this is similarly affected by movements in global oil market.

Energy Supply Mix

Petroleum-based fuels were still the predominant input energy sources used in the production of electricity supplied to the grid in 2017. However, there has been encouraging signs that Jamaica’s energy mix is slowly becoming more diversi� ed. With the introduction of Natural Gas (NG) and increased renewable capacity, petroleum-based fuels’ contribution to the energy mix was limited to approximately 70%. NG accounted for approximately 19% while the remainder was primarily attributed to renewable energy resources.

Table 4: Monthly Heat Rate Performance over the Period

Month

Avg. System

Heat Rate

(kJ/kWh)

Avg. JPS Thermal

Heat Rate

(kJ/kWh)

Heat Rate

Target

(kJ/kWh)

Apr-17 8,907 11,081 11620

May-17 8,750 11,134 11620

Jun-17 8,435 11,227 11620

Jul-17 9,175 11,475 11620

Aug-17 9,380 12,109 11620

Sep-17 9,569 11,628 11450

Oct-17 8,959 11,281 11450

Nov-17 9,110 11,191 11450

Dec-17 9,008 11,360 11450

Jan-18 8,945 11,208 11450

Feb-18 8,979 11,472 11450

Mar-18 9,280 11,079 11450

Figure 4: The Movement in Fuel & IPP Charge and Short-Run Avoided Cost – 2017 April to 2018 March


The � rst full year of operation was observed for both the re-con� gured BCC plant and the 80.3 MW of renewables commissioned in 2016. Their impact was quite signi� cant, as seen in Figure 5. The annual net generation from renewable energy sources accounted for approximately 11.18% of annual system net generation. The greatest contribution came from wind, hydro and the newly constructed utility solar facility in the amount of 6.72%, 3.45% and 0.96% respectively. (Figure 5)

Table 5: Annual Net Generation by Fuel Type

Net Generation by Fuel Type - GWh

Year HFO ADO LNG Hydro WindSolar +

OtherTotal

2009 3,013.65 1,001.22 140.07 58.57 0.47 4,213.98

2010 2,963.72 968.75 151.15 53.73 0.00 4,137.35

2011 2,902.92 990.13 149.53 93.79 0.52 4,136.89

2012 2,934.52 942.40 148.45 109.71 0.84 4,135.92

2013 3,181.69 719.13 120.31 119.77 0.74 4,141.64

2014 3,001.69 854.12 133.30 121.57 1.44 4,112.13

2015 3,082.59 870.93 125.10 128.94 1.75 4,209.32

2016 3,232.49 639.83 131.19 114.93 211.14 *14.66 4,343.81

2017 2,960.57 90.44 820.47 150.39 292.98 43.88 4,359.12

*Content Solar, the country’s � rst utility scale solar facility started operation in 2016

Figure 5: 2017 System Net Generation Apportioned by Fuel Type



ICT Usage and Adoption Survey

The OUR has the responsibility to collate the

of� cial statistics on the telecommunications

sector to, inter alia, inform government policy

and to provide international organisations such

as the International Telecommunications Union

with national ICT data. The OUR is therefore

required to undertake or commission periodic

surveys. In March 2016, the OUR commissioned

the Statistical Institute of Jamaica and the

University of the West Indies to conduct an ICT

Use and Adoption Survey for which � eldwork

commenced in late 2016. Perhaps somewhat

contrary to expectations, the results of the

survey concluded in late 2017 revealed that

affordability was not the top reason for non-

adoption and non-usage of the internet by

households and individuals.

The top three responses given by households

for not having internet access were:

1. “Do not need the internet”;

2. “Lack of con� dence, knowledge or skills to

use the internet”; and

3. “High cost of the internet service”.

In the case of non-use of the internet by

individuals, the top three responses for not

using the internet services were:

1. “I do not know how to use the internet”;

2. “I do not know how to use the computing

device to access the internet”; and

3. “Do not need the internet (not useful, not

interested)”

Cost Models for Termination Rates:

Pursuant to the Telecommunications Act, the

OUR also has responsibility to ensure that the

price levied for interconnection by dominant

carriers, with the exception of interconnection

charges for wholesale termination services, is

cost re� ective. This price should be set between

the total long run incremental cost of providing

the service and the stand alone cost of providing

the service. Further, interconnection charges for

wholesale termination services charges should

be calculated on the basis of a forward looking

long run incremental cost, where the relevant

increment is the wholesale termination service

and which includes only avoidable costs.

1. Fixed Termination Rates

During the 2016/2017 � scal year, a draft

� xed LRIC Model was developed and

consultations conducted with stakeholders.

On 2017 June 7, the OUR issued the

Determination Notice on Fixed Termination

Rates. According to the notice, the

termination rates determined by the model

would be subject to a two-step glide path

where the � rst reduction would take effect

as of 2017 July 1, and the second as of

2018 January 1. This resulted in a number

of appeals by C&WJ � rst for reconsideration

by the OUR, then to the Tribunal and

concurrently to the Supreme Court. These

are detailed elsewhere in this report under

litigation matters.

2. Update of the Cost Model for Mobile Termination Rate

The OUR began the process of updating the

cost model used for estimating the mobile

termination rate charged by operators.

The current model was completed in

2013 and had resulted in the setting of

a mobile termination rate of J$1.10. The

update process will be consultative with

stakeholder engagement occurring during

the consultancy. At the end of the review

period the OUR selected a consultant

from a competitive bidding process and

commenced negotiations with a view to

completing a signi� cant portion of the

update to the model in the 2018/2019

period.

Assessment of Competition in the Supply of Electronic Communication Services

During 2016/2017 the OUR embarked on a

complete assessment of the telecommunications

sector to determine if there has been any

change in the markets which were previously

de� ned and whether additional markets now


ANDREW LEWISEngineer

ANDRE LINDSAYEngineer

CURTIS ROBINSONSpecialist Consultant - Numbering & ICT Network

exist. The assessment also intended to indicate

which operators, if any, are to be classi� ed as

dominant in their respective markets. During

the review period, the OUR completed the data

collection portion of the project. Consultation

informed by the market assessment results are

scheduled to be conducted in 2018/2019.

Development of Unfair Contract Terms Guidelines and a Pecuniary Penalty Regime Under the Telecommunications Act

There have been concerns that some contract

terms for telecommunications facilities and

services may be skewed in favour of carriers

and service providers, and that they create

barriers that unfairly prevent consumers from

terminating services and switching operators,

such as in the case of excessive early termination

charges for retail contracts. The OUR therefore

believes that it is timely to review customer

contracts for telecommunications services and

facilities to ensure that they remain reasonable

and fair to both operators and consumers.

Such review is in keeping with the OUR’s

powers under the Telecommunications Act to

examine customer contracts and direct their

modi� cation where terms are deemed to be

unfair or unreasonable.

The OUR is also committed to taking action

to encourage and enforce compliance with

provisions of the Telecommunications Act, in

order to, among other things:

• Maintain and promote competition and

remedy market failure, and

• Protect the interests and safety of

consumers.

The Telecommunications Act provides the OUR

with several enforcement mechanisms. One

such mechanism is a � xed penalty process

by which the OUR may offer a person, who

it believes has committed an offence under

the Act, the opportunity to discharge its

liability through the payment of a pecuniary

penalty (� ne). Currently, the regime is not

fully established as the � xed penalty offences

and their associated � nes have not yet been

prescribed. The OUR therefore intends to

submit recommendations to the Ministry with

responsibility for telecommunications on this

after public consultation.

The consultancy to inform these initiatives have

been combined and a consultant was selected

during the 2016/2017 period to undertake

both. The consultant was engaged to, inter alia:

1) undertake a comprehensive assessment of


contracts used by telecommunications licensees

in the supply of facilities and speci� ed services

to determine whether there are any unfair

or unreasonable contract terms; 2) develop

guidelines that will assist the industry in

formulating service and facilities contracts that

are deemed fair and reasonable; 3) conduct

a general assessment and determination of

what terms and conditions are reasonable

for inclusion in customer contracts; and 4)

identify and recommend offences under the

Telecommunications Act that should be the

subject of the � xed penalty regime and their

associated � nes.

During the review period there were delays in

the data collection and consultation phases of

the projects. The project is therefore expected

to be concluded during the next � nancial year.

Development of Infrastructure-Sharing Rules

Section 29A of the Telecommunications Act

provides the Of� ce with the authority to

promulgate rules mandating infrastructure

sharing following consultation with the

responsible Minister. The rationale for such

rules is to avoid the duplication of investment.

It is the OUR’s view that the optimum

utilisation of resources can reduce the cost of

investment which will bene� t consumers of

telecommunications services.

On 2017 March 30 the OUR issued the Notice of

Proposed Rule Making (NPRM) on Infrastructure-

Sharing Rules Document. Following a robust

consultation process the OUR prepared the

draft rules which were also submitted to MSET

in 2018 February.

Equivalence in Access and Choice for Persons with Disabilities

One of the objectives of the Telecommunications

Act is the promotion of “the interests of

customers, purchasers and other users

(including, in particular, persons who are

disabled or elderly) in respect of the quality

and variety of telecommunications services and

equipment supplied.”

The OUR is of the view that ensuring the

provision of services for consumers with

disabilities is important to ensure that all

Jamaicans can bene� t from new ICT services

and fully participate in the ful� lment of Vision

2030. In this regard, improved access to

telecommunications services will allow persons

with disabilities to participate fully in community

life and become better integrated in the social

and economic life of the society. The aim of the

project is to assess the degree to which access

and choice for end-users with disabilities are

equivalent to other persons in the society, and

identify measures to address the de� ciencies

identi� ed.

A draft consultation document was under

development at the end of the period with a

public consultation exercise scheduled for the

2018/2019 period.

Development of Common Short Codes

The OUR developed supplementary rules and

a code of practice for the administration and

use of common short codes. Further work was

also carried out on the development of the

numbering scheme to ensure its applicability

to the impending mobile money services. The

Common Short Code Determination Notice

was published on 2017 September 5.

Given the pending move to 10 digit dialling

on 2018 May 31, it was decided that the

implementation of the Common Short Code

Regime should be deferred until after the

implementation of 10-digit dialling.

Area Code Relief Planning and Implementation

The numbering capacity of the ‘876’ area code

which currently serves Jamaica is approaching

exhaustion and the OUR developed a plan to

facilitate the introduction of an additional area

code.

The OUR also applied to the North American

Numbering Plan Administration (NANPA),

an agency of the United States Federal

Communications Commission, and received

an additional area code for Jamaica. On 2017

August 25, the NANPA published the planning

letter on its website, to notify internationally


the assignment of area code '658' to Jamaica.

Further, arising out of the work of the joint

OUR and industry stakeholders area code Relief

Planning Committee and subsidiary taskforces,

2018 May 31, was established as the date

for the implementation of ten digit dialling

for Jamaica. In addition, a permissive dialling

period, from 2018 May 31 to 2018 October 30,

was established.

On 2017 August 28, the OUR issued a local

public notice informing that Jamaica had

obtained an additional area code and that the

implementation of the code would necessitate

the introduction of mandatory ten-digit dialling,

that is, dialling using the 3-digit area code plus

the seven-digit telephone number, for all local

calls in Jamaica. During the review period,

the OUR worked with the service providers

to ensure network readiness and adequate

customer education programmes before the

May 31 implementation date.

Other Telecommunications Initiatives

Policy Recommendations on Enhanced Access to Emergency Services

The OUR embarked on a project to make policy

recommendations to the responsible Minister

regarding enhanced access to emergency

services in Jamaica (and with the use of relevant

state-of-the-art communications technologies).

Customarily, Cable & Wireless Jamaica (t/a

FLOW) provides an emergency operator service

to assist callers to reach the Fire Brigade, the

Police and an ambulance service, separately

or jointly, depending on the nature of the

emergency. FLOW, however, has indicated

its intention to discontinue this service but has

continued, its provision through funding from

the Universal Service Fund. This is expected

to continue until new arrangements are put in

place by the Ministry.

In the meantime the Ministry responsible for

telecommunications has directed the OUR to

develop and submit policy recommendations

on enhanced access to emergency services.

Accordingly, the OUR in 2017 October, through

a competitive bidding process, engaged the

services of Winbourne Consulting, LLC, to work

on the project. The consultant was required

to conduct an overall review of emergency

service access arrangements in Jamaica and


ASTON STEPHENSSpecialist Consultant - Transmission Planning

VALENTINE FAGANSpecialist Consultant - Power Systems

SHONNA-KAYE SAPPLETONProject Coordinator/ Executive Assistant

propose technically, economically and operationally feasible alternative means

of accommodating the end-to-end process of call initiation, handling, and

forwarding to emergency service providers.

The consultant, by way of on-site visits and meetings with key stakeholders

performed an initial analysis of the Jamaican situation and submitted a draft

Emergency Communications Legislative and regulatory policy discussion

document which was reviewed by the OUR. Following further consultation

with stakeholders in 2018/2019 and the receipt of the � nal report from the

consultant, the OUR will present its recommendations to the Ministry.

ICT Indicators Workshop

On 2018 March 27-28, the OUR in collaboration with the MSET held an information and communication technology (ICT) Indicators Workshop. The objective was to sensitize stakeholders involved in producing statistics and indicators on ICTs, in particular those used to calculate the ICT Development Index (IDI) about their importance and use. The IDI is published annually by the International Telecommunications Union (ITU) and is used to track, monitor and compare developments in ICT between countries and over time. Jamaica’s ranking for 2017 was 98th out of 176 countries. The country’s ranking on this index has implications for investments as investors take account of the index when making decisions about where to invest. It is therefore essential that the data which is used to calculate ICT indicators for domestic and international reporting is accurately captured and in a timely manner. The workshop was conducted by an ITU expert and examined, among other things, the de� nition and compilation of ICT indicators as well as national coordination mechanisms

for the production of ICT statistics.

Update on Important Telecommunications Sector Indicators

Fixed Line Service

Fixed line subscriptions stood at 297,027 at the end of December 2017,

representing a 4.25% decline when compared to the previous period. The

overall decline is a re� ection of marginal decreases in subscriptions for both

residential and business � xed line service.

Table 6: Fixed Line Subscription (‘000) & Penetration Rates (2008-2017)

YEARSUBSCRIPTIONS

PENETRATIONTOTAL RESIDENTIAL BUSINESS

2008 316.60 225.80 90.80 11.80%

2009 302.50 214.70 87.80 11.20%

2010 284.30 203.30 81.00 10.50%

2011 267.60 189.10 78.50 9.90%

2012 253.14 175.92 77.23 9.52%

2013 250.34 174.86 75.48 9.23%

2014 253.50 180.10 73.40 9.31%

2015 252.84 181.04 71.80 9.28%

2016 310.21 234.99 75.22 11.39%

2017 297.03 225.49 71.54 10.91%

Table 7: Mobile Subscriptions (‘000) & Penetration Rates (2008-2017)

Year Subscriptions Prepaid Post-paid Penetration %

2008 2,723.30 2,639.10 84.20 101.20%

2009 2,956.10 2,858.10 98.00 109.50%

2010 3,181.90 3,049.00 133.00 117.80%

2011 2,945.40 2,825.70 119.70 108.60%

2012 2,714.94 2,563.63 151.30 100.11%

2013 2,846.20 2,696.41 149.79 104.95%

2014 3,005.49 2,851.09 154.40 110.36%

2015 3,137.21 2,970.78 166.42 115.20%

2016 3,267.34 3,085.09 182.26 119.98%

2017 3,091.22 2,904.17 187.05 113.51%


Mobile Service

Mobile service subscriptions totalled approximately 3.1 million as at

December 2017, having declined by 5.39% relative to the previous

period when subscriptions stood at approximately 3.3 million. While

pre-paid subscriptions declined marginally by 5.86%, post-paid

subscriptions increased by 2.63% when compared with the 2016

period.

Internet Service

Fixed broadband subscriptions stood at 200,909 as at December 2017,

representing a 4.6% increase over the previous year when it stood

at 192,074. As at December 2017, mobile broadband subscriptions

totalled 1,412,217 representing 88% of overall internet subscriptions

of 1,613,126.

Table 8: Distribution of Internet Subscription (‘000) & Penetration Rates (2008-2017)

SUBSCRIPTIONS

PENETRATIONYEAR TOTAL

FIXED

NARROWBAND

FIXED

BROADBAND

MOBILE

BROADBAND

2008 104.22 3.08 97.73 3.90%

2009 114.60 2.22 112.30 4.26%

2010 118.21 1.42 116.77 4.39%

2011 118.27 0 118.27 4.37%

2012 124.17 1.12 123.05 4.58%

2013 998.10 0.98 140.82 856.31 36.80%

2014 1,384.61 0.97 156.04 1,227.60 50.84%

2015 1,670.28 0.96 163.96 1,505.36 61.33%

2016 1,781.40 192.07 1,589.33 65.41%

2017 1,613.13 200.91 1,412.22 59.24%


Director, Regulation, Policy, Monitoring and Enforcement, Cedric Wilson gives an address at a Productivity Workshop on “Emerging Regulatory Issues” on 2018 February 6-7. This workshop was in collaboration with the Caribbean Development Bank (CDB) and the United States Agency for International Development Caribbean Clean Energy Program (USAID - CARCEP). The workshop explored the issues of productivity targets of solar technology, as well as the implications of energy storage technologies for the grid.

WATER AND SEWERAGE

Runaway Bay Water Company Limited Bulk Water Rate Determination Notice

In 2016 Runaway Bay Water Company Limited (RBWCL) submitted a tariff application seeking a non-objection decision for a 45% rate increase to its potable bulk water rate that is being charged to the NWC. RBWCL stated that if the proposed 45% increase is approved, bulk water price would be increased to $50.00 per cubic meter. RBWCL argued that the requested increase would place the company in a position to attain an annual pro� t margin of $4M or 10%. It took a number of iterations and substantive request for information and clari� cation before the OUR was able to conclude its analysis of the application.

Consistent, with the procedures outlined in RBWCL’s 2004 licence, the OUR applied the rate of return methodology to analyse the company’s request. Resulting from its analysis the OUR approved an increase in the volumetric rate of bulk water sold to NWC from $34.39/M3 to $38.71/M3 . The OUR also determined that � xed monthly service charge at $10,196.84 for a 6” meter and $6,693.50 for a 4” meter would remain unchanged. The determination took effect on 2018 February 1.

Can-Cara Development Limited Water and Sewerage Rate Determination Notice

On 2017 May 15, Can-Cara Development Limited (CDL) applied for a non-objection to an increase of approximately 27% in water

rates and 15% in sewerage rates on the basis that the proposed rates were lower than those approved for the NWC. CDL indicated that it had not received an increase in its rates since 2014 March. The company further pointed out that it has been experiencing dif� culties maintaining � nancial viability but if its requested rates are approved, it would be able to cover its operating costs and be placed in a position to � nance planned capital improvements.

In keeping with its current practice to grant a no-objection since the proposed rates were lower than those of the NWC the OUR granted the request and the rates became effective on 2018 February 1. The OUR also took the opportunity of the application to engage with both CDL and its customers on measures to improve quality of service and reduce customer complaints.

Landmark Developers Limited Sewerage Rates Determination Notice

In 2011, Landmark Developers Limited (LDL) received a licence to operate as a sewage treatment company. On 2017 May 19, LDL applied to the OUR for the introduction of sewerage rates and charges to its prospective customers of Liberty Estate, in St. Mary. In addition to its base rates and charges, LDL requested that a monthly Price Adjustment Mechanism (PAM) be included in its tariff structure.

The OUR issued its determination on the rates approved for LDL on 2018 January 17. The Of� ce determined that LDL’s average tariff should


be $3,103.22M3 per month, connection fee, reconnection fee, and the PAM were approved as a part of the tariff structure. The OUR took note of the quality of service issues raised by customers served by LDL, and stipulated in its decision a number of quality of service measures that the company should implement.

NWC J$24 Billion Bond-Debt Re� nancing Proposal

In 2017 March, the OUR was asked to consider and indicate its non-objection to the NWC proposal to secure a portion of three (3) Bond issues totalling J$24 billion from National Commercial Bank Capital Markets (NCBCM) with the K-Factor Fund. NWC’s proposal was to use K-Factor in� ows to secure J$12.51 billion of the total amount of which J$9.51 billion would be used to re� nance existing USD denoted K-Factor loans while the additional J$3 billion would be used to fund other K-Factor capital works.

In making its case, the NWC argued that the capacity of the K-Factor to � nance the loans tied to the Fund had been negatively impacted

by the sustained depreciation of the Jamaican currency as well as the relatively high interest rates on existing loans when compared to the rates that can now be secured in the market. In light of this, the NWC considers that there was merit to re-� nancing some of its existing K-Factor loans. As at 2017 April 30 the NWC’s US$ denominated long term debt amounted to US$275.8M (i.e. J$33.4B).

The NWC proposed to use three different bonds of varying maturity to re� nance the US$257.8M of the debts identi� ed. The indicative terms of the three (3) bonds were:

• J$10B at 10.25% - 10 years• J$2B at 11.40% - 20 years• J$12B at 13.35% - 40 years

The OUR concluded on the basis of its analysis that the projected cash � ows suggested that the bonds would be of bene� t to the K-Factor Fund in terms of improved availability of funds to � nance projects given the risks associated with the depreciation of the domestic currency against its US counterpart. Additionally, the effort by the NWC to secure this bond was in

keeping with the OUR’s previously expressed view that the company ought to seek loans to fund projects initially and utilize the K-Factor � ows to repay such loans.

In light of this the Of� ce issued a non-objection to NWC using K-Factor proceeds up to 2032 December 31 to:

1) Secure bonds in the amount equivalent to that required to fully settle the USD denoted K Factor loans equivalent to J$9.5B;

2) Secure bonds for an additional J$3 billion to fund previously approved K-Factor projects; and

3) Establish the requisite Debt Service Reserve Account with NCBCM that would allow NWC to make payments on the aforementioned bonds as they become due.

The Of� ce also indicated that its non-objection was based on ful� lments of a number of conditions that the NWC should insist on in � nalizing the re� nancing deal.

Table 9: NWC’s Water Production & Consumption

2016/2017 & 2017/2018

Details 2016/2017 2017/2018

Production (000’MG) 70,014.02 71,522.16

Consumption 19,682.76 20,477.39

Non-Revenue Water 70.73% 73.35%

Connections 475,575 493,470

Table 10: Small Private Water Sector Production & Consumption 2016/2017 & 2017/2018

Details Production M3 Consumption M3

Runaway Bay Water Company Limited 2,358,795 2,208,843

Can-Cara Development Limited 2,358,795 N/A

Dynamic Environmental Management Limited 694,607 412,205


NWC Proposed PPP Arrangement to fund Rio Cobre Water Treatment Plant

The Of� ce was asked to give its no objection to a proposal by the NWC to build a 15 million gallon per day (MGD) Water Treatment Plant (WTP) at Rio Cobre. The project is premised on a 20-year PPP arrangement. NWC’s PPP proposal is structured around a Build Own Operate Transfer (BOOT) plan which involves the construction of the plant over a 2-year period, followed by an 18-year operation by the private partners, after which ownership of the WTP is to be transferred to the NWC. Based on the proposed PPP construct, NWC would buy the output of the plant from the private sector partners under a Water Purchase Agreement (WPA) and retail it to its customers.

Under the proposed PPP, Vinci Construction Grands Projects (VCGP) and Sagicor would be equity partners with the former responsible for 30% of the project’s equity and Sagicor accounting for the other 70%. The construction and operation of the plant will be done through a Special Purpose Vehicle (SPV) controlled by VCGP. The debt component is to be arranged by SIJL through multiple lenders. The development of the plant is projected to cost J$7.254 billion and its � nancing is to be based on 20% equity and 80% debt. The OUR’s analysis revealed that the project would face pro� tability challenges after its implementation unless the NWC signi� cantly reduced its non-revenue water.

Notwithstanding, the Of� ce provided its non-objection to the project on the grounds that:

• The project is one of national signi� cance and has the potential to address the severe drought that affects the Kingston and St. Andrew;

• The project is poised to meet growing residential and commercial water demand in south eastern St. Catherine; and

• The greatest obstacle to the project being a success is the NWC’s capacity to reduce Non Revenue Water (NRW) but the current NRW Reduction Programme suggests that the company has a good chance of achieving the targets set if it maintains a steady focus.

The no-objection was attached to several conditions including a re-negotiation of the risk allocation in keeping with the fact that NWC has no equity stake in the venture.

NWC’s Annual Price Adjustment Mechanism (ANPAM) and X-Factor Application

The NWC submitted an Annual Price Adjustment Mechanism (ANPAM) application to the OUR for 2017/2018, its application also included a request that its X-Factor variable (ef� ciency factor) be maintained at 5.5%.

The OUR reviewed NWC’s application and determined its ANPAM rate to be 6.27%. This increase was attributed to changes in underline base values for the exchange rate, consumer price index and electricity per kWh. The X-Factor was increased from 5.5% to 6.20% in keeping with the NRW criterion established in NWC’s Mid-Tariff Determination Notice.

Annual Price Adjustment Mechanism for Small Providers

The Price Adjustment Mechanism (PAM) is an indexation applied to the base rates as well as charges for water and sewerage services in order to preserve the real price for the company providing its services. Dynamic Environmental Management Limited (DEML) and Runaway Bay Water Company Limited were the two small private providers of water and sewerage services that applied for the adjustment during the period. Adjustments were made to DEML’s and RBWCL’s base rates via annual PAM to the degree of 12.11% and 6.27% respectively.

Potable Water Statistics NWC

Water production in the review year improved marginally. NWC reported that the increase in the level of rainfall helped it to consistently supply water to the majority of its customers. Consumption and number of connections/customers also increased. Table 9 shows some key potable water statistics for the NWC for the years 2016/2017 and 2017/2018.

As a part of its 2013 tariff approval, the OUR established that one key operational performance target that the NWC should address is the level of deterioration of its NRW. The NWC has taken the initiative to improve its NRW levels and has entered into a Public Private Partnership with Miya International to reduce its levels of NRW. The NRW reduction programme is still ongoing and the OUR is optimistic that the desired level of NRW will be achieved in the long run.


Small Private Potable Water Statistics

Private sector involvement in the water sector continues to thrive. As a result of this the OUR believes that these providers are adding value to the sector and therefore requires that these providers supply the necessary information needed to capture their impact on the sector. Table 10 shows production and consumption data for three main players in the small private water sector in 2017.

K-Factor

In its 2008 Determination, the Of� ce approved a K-Factor to fund a capital intensive programme of ef� ciency improvement inclusive of mains replacement and other NRW projects. The programme was to reverse the effects of years of under and inadequate capital funding in critical areas of the NWC’s operation and to put the company on the path of increased ef� ciency.

The K-Factor would be linked to the X-Factor since it was expected that the strategic use of the K-Factor Fund would lead to an improvement in ef� ciency. The existing approved K-and X-Factors represent 16% and 5.5% of the company’s billed revenues respectively.

NWC is required to put funds equivalent to a portion of the billed amount for the K-Factor termed the Deemed K-Factor Billing amount into the fund within 45 days after billing.

The objectives of the K-Factor are to: • Fund capital intensive programmes of

ef� ciency improvement inclusive of mains replacement, and other NRW activities.

• Fund capital rehabilitation programmes that will not yield any signi� cant increase

in revenues for the NWC, but is required to comply with a speci� c regulatory direction; and

• Incorporate the expansion of the collection network for wastewater so as to better utilise the Soapberry Wastewater Treatment Plant.

The K-Factor regime is scheduled to remain in place until 2032 December 31. The OUR is required to approve each project to be funded by the K-Factor prior to its execution and monitor the roll out of the programme.

Management and Operational Audit of NWC’s K-Factor Programme

As part of its oversight responsibility for the K-Factor the OUR determined that an audit should be undertaken. The audit commenced in August 2017 and was completed 2017 December.

The main � ndings of the audit were:

a) Over the period 2008 to 2017 the K-Factor programme saw in� ows of J$23.6B into the fund.

b) Approximately J$36.3B was spent on K-Factor projects for the period April 2008 to March 2017.

c) The K-Factor out� ows over the audited period were allocated as follows:

a. NRW Reduction : 88% or J$32B was spent on 73 projects

b. Sewer & Waste Water Treatment Plants: 5% or J$1.714B was spent on 6 projects. This was to comply with NEPA quality standards.

c. Sewerage Service in Kingston & St. Andrew (KSA): 7% or J$2.5B was spent on 28 projects to improve the availability of sewerage services in the KSA. This led to increased � ows to the Soapberry Treatment plant which met that objective.

Based on the outcome of the audit, the OUR intends to address the areas of de� ciency over the coming � scal year.

K-Factor Fund Operations (2017 – 2018)

The K-Factor programme saw in� ows and out� ows of the 2017-2018 � nancial year of roughly the same magnitude. (See Table 11) The total in� ows for the period was J$3.56B representing a 19% increase over the previous period, while total out� ows was J$3.59B, an increase of 15% over the previous year.

Table 11: K-Factor In� ows and Out� ows – April 2017 to March 2018

PERIOD2017 2018

TOTALAPR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR

INFLOWS (J$M)

DEEMED K-Factor BILLING

285.13 280.63 309.65 288.07 305.02 299.63 304.97 297.52 279.17 302.45 297.85 308.53 3,558.62

OUTFLOWS (J$M)

K-Factor

OUTFLOWS531.02 33.84 743.71 42.71 34.99 326.35 405.05 71.62 458.16 505.46 82.80 350.52 3,586.23



The department advised on a number of regulatory and administrative

matters ensuring that the OUR observed due process, complied with all legal

requirements in discharging its regulatory functions, and maintained an orderly

and ef� cient regulatory environment.

LEGISLATIVE AND REGULATORY REFORM

In relation to its advisory functions, the OUR provided advice and recommendations

to the Ministry of Science, Energy and Technology (MSET) on various sector

speci� c matters. Notably, we provided further comments on the licensing and the

pecuniary penalty regimes under the Electricity Act. The OUR reviewed the revised

Information and Communications Technology Policy and Draft Legislation, the

objective of which is to provide a comprehensive framework for the ICT sector.

The OUR reviewed the proposed policy for Petroleum (Downstream Activities) Act,

the objective of which is to provide a comprehensive framework for the regulation

of the natural gas sector and the OUR with the jurisdiction to regulate same.

LEGAL

CHERYL LEWISGeneral Counsel

CHENÉE RILEYDeputy General Counsel

LITIGATION MATTERS

From 2017 April to 2018 March, our legal

of�cers managed eleven litigation matters,

nine of which were carried over from previous

periods. The matters are comprised as follows:

two matters before the Telecommunications

Appeal Tribunal, one of which interim relief

was also sought in the Supreme Court; two

matters before the Electricity Appeal Tribunal;

one matter pending the establishment of a

competent tribunal to adjudicate the appeal;

three matters before the Supreme Court, one

of which transitioned to the Court of Appeal

and is awaiting a date for Case Management;

one matter before the Judicial Committee

of the Privy Council, which was disposed of

and costs pursued; one matter before the

Access to Information Appeal Tribunal; one

matter in which the satisfaction of judgment is

proceeding and another in which the collection

of costs awarded is being pursued. Some of the

matters are highlighted as follows:


Telecommunications Appeal Tribunal & Supreme Court

• Appeal by C&WJ against the

implementation period prescribed for rates

in Determination Notice dated 2017 June

7 – “Cost Model for Fixed Termination

Rates – The Decision on Rates – Public

Version”, Document No. 2017/TEL/004/

DET.002. The OUR determined the new

rates to be charged for �xed termination

services, and prescribed a two tiered

implementation of the rates with the �rst

step down scheduled for 2017 July 1 and

the second step down scheduled for 2018

January 1.

On 2017 June 21, C&WJ sought a

reconsideration of the OUR’s decision

pursuant to section 60(4) of the

Telecommunications Act and the OUR

stayed its decision until the issuance

of its decision. After a review of the

reconsideration request and consultation

with the industry, the OUR issued its

�nal decision on 2017 September

8, “Reconsideration of the Of�ce’s

Decision: Determination Notice (2017/

TEL/003/DET.001) “Cost Model for Fixed

Termination Rates – The Decision on Rates

– Public Version”, Document No. 2017/

TEL/007/RCN.002, con�rming its previous

determination except that the �rst step

down in the glide path was �xed for 2017

October 1 and the second step down,

2018 April 1.

On 2017 September 19, C&WJ �led an

appeal of the reconsideration decision with

the Tribunal. In the absence of a constituted

Tribunal, on 2017 September 28, C&WJ

Limited �led a Notice of Application for

court orders in the Supreme Court seeking

leave to apply for judicial review of the

OUR’s reconsideration decision and an

injunction to stay the decision pending

judicial review of the matter. The matter

was heard by Mr. Justice Kirk Anderson

on 2017 October 5 and he delivered his

decision on 2017 October 31. The learned

judge denied C&WJ’s application for leave

to apply for judicial review and an interim

injunction of the OUR’s Reconsideration

Decision with respect to the glide path.

The denial was on the basis that C&WJ had

an alternative remedy to judicial review

to address its concerns with the OUR’s

decision i.e. via an appeal to the newly

constituted Tribunal. C&WJ’s application

for leave to appeal the Judge’s decision

was also denied.

Consequently, C&WJ relisted the matter

for hearing before the newly constituted

Tribunal, which had come into effect

on 2017 October 3. The Tribunal heard

C&WJ’s appeal on 2018 February 26 and

delivered its judgment on 2018 March

28. The Tribunal dismissed the appeal and

upheld the OUR’s decision regarding the

implementation of new �xed termination

rates.


WAYNE MCGREGORSenior Legal Counsel

NICOLE MORGANLegal Counsel

FRANCINE BROWN-THOMASAdministrative Assistant

ELECTRICITY SECTOR

Electricity Appeal Tribunal

• An appeal against OUR’s Determination

Notice dated 2015 January 7, “Jamaica

Public Service Company Limited Tariff

Review for the Period 2014-2019:

Determination Notice”, Document No.

2014/ELE/008/DET 004 (Appeal No. 1)

and an appeal against the OUR’s Directive

dated 2015 February 13, “Directive to

Jamaica Public Service Company Limited

for the Repayment of Foreign Exchange

Adjustment Charges on Fuel supplied by

PetroJam Limited during the period March

2013 to December 2013”, Document No.

2015/ELE/002/DIR.001 (Appeal No. 2) were

still before the Tribunal at the end of the

review period. JPS appealed a number of

the OUR’s determinations regarding the

tariff to be charged by JPS during the 2014

– 2019 rate period, and the directive to

JPS to repay to customers certain foreign

exchange adjustment charges taken during

the period 2013 March to 2013 December.

Pursuant to directions of the Tribunal,

Appeals No 1 and 2 will be heard together.

The hearing, which was set for 2016

October 3-14, was further adjourned for

a date to be agreed in 2017 September.

In 2017 March, the OUR requested JPS

to indicate the grounds of appeal that it

intended to pursue. By letter dated 2017

August 24, JPS withdrew certain grounds

and indicated its intention to proceed

with the remaining grounds. Due to the

expiration of the term of the members

of the Tribunal in 2017 September (the

Tribunal has since been reconstituted),

no date for hearing was set and no steps

have been taken by JPS to have the matter

relisted for hearing.

Supreme Court

• The OUR, on 2014 June 17, � led an

application for leave to apply for judicial

review and declarations of the court in

relation to the Contractor General’s Report

entitled “Report of Special Investigation –

Right to Supply 360 Megawatts of Power

to the National Grid- Of� ce of Utilities

Regulation, Ministry of Science, Technology,

Energy and Mining” in which, certain

statements and conclusions criticising

the procurement process undertaken by


the OUR and the inclusion of certain bidders in

the process were made. Following the hearing in

2014 November and December and the ruling of

Mr. Justice Fraser on 2016 February 26, dismissing

the OUR’s application for leave to apply for judicial

review, the OUR � led a Fixed Date Claim seeking

various declarations of the Court regarding the

Contractor General’s Report. The hearing dates

which were set for 2017 October 3-6 and 9-11 were

vacated and a new trial date for hearing was set for

the week commencing 2018 April 30. The matter

was settled as between the parties subsequent to

the end of the review period.

Judicial Committee of the Privy Council

• Appeal against OUR’s Determination Notice dated

2010 March 2 “Jamaica Public Service Company

Limited Z-Factor Claim for Reclassi� cation

Compensation”, Document No. Ele 2010/1:Det/1,

in which the OUR did not allow a $4,273 million

claim by JPS under the Z-Factor provision of the

JPS Licence. The Court of Appeal, on 2015 March

13, upheld the decisions of the All-Island Electricity

Appeal Tribunal and the Supreme Court which were

in favour of the OUR. JPS was granted leave to

appeal to the Privy Council on 2015 November 2.

The matter was heard before the Privy Council on 2017

June 7 and judgment delivered on 2017 July 6. The

Privy Council dismissed JPS’ appeal and awarded

to the OUR, the costs of litigating the matter in

the Privy Council and Court of Appeal. JPS agreed

the OUR’s Privy Council costs and payment was

received by the OUR. The OUR’s Attorneys-at-Law

are pursuing the Court of Appeal costs.

TRANSPORTATION SECTOR

• The OUR had initiated an action in the Supreme

Court to recover over $22M in outstanding

regulatory fees plus interest from the Jamaica

Urban Transit Company Limited (JUTC). On 2015

November 12, judgment was entered in favour of

the OUR in the amount of $16M including costs and

interest. JUTC initially paid $6M of the judgment

debt. As of 2017 September, JUTC, pursuant to

a payment agreement to settle the outstanding

balance of $10M, has been making payments by

way of monthly instalments.


For the year 2017/2018, the Information Technology and Risk department

continued its effort to support the regulatory mandate of the organisation by

seeking to improve the information technology infrastructure and risk management

framework. As with everywhere else, there has become a greater dependence

on information technology to improve the ef� ciency and effectiveness of the

work being performed. To facilitate this the ITR has maintained its obligation to

ensure that the organisation always has state-of-the-art information technology

equipment and infrastructure in place.

Highlights of the work of the ITR department for the � scal year are:

a. The continual concern for the year was the high incidents of cybersecurity

attacks on both the public and private information systems infrastructure.

Tools have been acquired to ensure better and more in-depth analysis and

reporting to improve our vigilance and ability to be proactive. The OUR’s

network was minimally impacted with no recorded downtime of our services

arising from any such event.

b. The continued maintenance and enhancements of in-house developed

systems was conducted throughout the year. These included the

improvement in the reports, data retrieval and creation of interface and

INFORMATION TECHNOLOGY & RISK

(ITR)

LEIGHTON HAMILTONDirector, Information Technology & Risk

OTIS ANDERSONManager - Solution Development & Risk


analysis tools such as Microsoft Excel.

c. There was also the replacement of

obsolete equipment such as laptops,

printers and servers to ensure that

the work of the organisation was not

hindered by outdated technology.

d. There was also the continued efforts to

build the internal capacity of staff through

the use of computer-based training which

limited the need for them to be out of

of� ce which was a saving to the OUR.

The department will also continue with

the planned upgrading of the hardware

and software of our systems as well as the

implementation of new technologies and

systems to improve the information provided to

all of the OUR stakeholders.

Quality Management System (QMS)

The OUR has maintained its International

Organisation of Standards (ISO) 9001:2008

Quality Management System certi� cation

through the annual surveillance audit in July

2017. In March 2018, we transitioned to

the ISO 9001:2015 Quality Management

System standard to ensure that we maintained

our international certi� cation and that the

organisation continues to demonstrate to all

our stakeholders our emphasis on delivering

measurable quality service to Jamaica.

The activities undertaken during the year

included inter alia:

1. A process audit to determine measures

to improve the ef� ciency of the OUR and

stakeholder experience with the OUR.

2. The execution of the QMS Management

Review and approval was performed for

all the core processes of the organisation.

In 2017/2018 the OUR will ensure the

maintenance of the certi� cation, along with the

execution of internal process audits.

Enterprise Risk Management (ERM)

The OUR is now certi� ed against the ISO

9001:2015 standard which is based on a

risk based approach to management which

enhanced the integration of the Enterprise

Risk Management System (ERM) into the OUR’s

operations.

This year’s risk register was generated on a

quarterly basis and presented to the Audit

Committee of the Of� ce for review and

oversight. For the quarter ending March 31,

JUDENE CHANNERGraphic Of� cer/ Help Desk Coordinator

MARVIN DOMVILLESolution Developer

ANDREW WILLIAMSInformation Security Of� cer


2018, 6% of all risk was identi� ed as high with the majority (88%)

identi� ed as being medium as shown.

For 2018/2019 � scal year the ERM will be immersed in the operations

of the OUR through the ISO 9001:2015 Quality Management System

standard which forces the use of a risk based approach to management.


On 2018 March 27 and 28, the OUR in collaboration with the Ministry of Science, Energy and Technology organized a two-day ICT Indicators Workshop at Hotel Four Seasons. The objective of the workshop was to sensitise stakeholders in producing statistics and indicators on ICTs, in particular those used to calculate the ICT Development Index (IDI). The workshop was aimed at strengthening Jamaica’s capacity to produce high quality and harmonised telecommunications/ICT statistics and indicators. Senior Regulatory Analyst, Marsha Minott (right), engages Mr. Inigo Herguera, ITU Expert from the International Telecommunications Union (ITU) in conversation. Mr. Herguera conducted part of the training.

The 2017/2018 � nancial year was a very special one for the OUR and by

extension the Administration and Human Resource (HR) department. The

OUR’s celebration of its 20th anniversary, meant that some members of the

Administration and HR department were recognised for providing 20 years of

unbroken support to the organisation. Throughout the celebratory year, the

department continued to play an integral role in contributing to the mandate

of the organisation by providing the requisite support services to its internal

customers. We remained keen on honouring our obligations to external

stakeholders, through the execution of our functions.

ADMINISTRATION AND HUMAN RESOURCE

ROHAN MCCALLADirector, Administration and Human Resource (Acting)

NOVA BARNETTSenior Procurement/ Purchasing Of� cer

INGRID BROWN-CRIPPSPersonnel/ Administration Of� cer

LYNDON ADLAMManager - Records & Information Management (Acting)



At a macro level, the department remains

responsible for providing services such

as HR (recruitment and selection, on-

boarding, recognition and reward, retention,

accommodation, performance management,

compensation, health and wellness, employee

engagement and enablement, training and

development, succession management,

separation management); procurement of

goods, general, and consultancy services;

general administration; and records and

information management.

The department adopted the following mission

statement to help guide the delivery of our

functions:

“In support of the OUR’s vision, mission,

core values, and value propositions, the

Administration and Human Resource

Department will work with other

departments to recruit, recognise, develop,

and reward our most valuable resource –

our PEOPLE.”

Over the reporting period, we actively

spearheaded a number of recruitment,

selection, and on-boarding activities for

staff. We were intentional in ensuring that

new members of staff and those who were

promoted were oriented to the organisation’s

Quality Management System (QMS). The

department was instrumental in the internal

movements and separation management of

staff members. At the end of 2018 March,

the staff complement was sixty-four (64) plus

� ve (5) specialist consultants, on � xed-term

contracts. During the � nancial year, two

Consumer Affairs Of� cers were appointed in

the Consumer and Public Affairs department.

The Coordinator OURIC/Information Of� cer, in

that department, resigned in 2017 December.

The Manager Regulation and Policy – Electricity,

Water, and Sewerage in the Regulation, Policy,

Monitoring, and Enforcement department also

resigned in 2017 April and a new manager was

appointed in 2017 August. A new Financial

Controller joined the organisation in 2017

November, following the departure of the

of� cer who previously held that position. The

Internal Auditor was promoted to the position

of Chief Internal Auditor in 2018 February. The

Manager – Solutions Development, Support,

and Risk resigned from the organisation in

2017 September. The Director, Administration

and HR, retired at the end of 2017 December.

The Manager, Records and Information

Management, in the Administration and

HR department, was appointed to act in

VENETIA COOKERecords & Information Management Of� cer

MELISSA BEADLEAdministrative Assistant

KADINE WILLIAMSRecords & Information Management Of� cer


the position of Director, Administration and

HR in 2018 January. The Senior Records

and Information Management Of� cer was

appointed to act as Manager, Records and

Information Management in 2018 January.

As part of the organisation’s intention to

continually engage members of staff, a

one-day retreat was held in 2017 August. An

important part of the day’s activities was the re-

orientation of staff to the organisation’s Quality

Management System and an explanation of

the transition from the 9001:2008 to the

9001:2015 Standards. Staff also participated

in team-building exercises, which assisted the

continued spirit of oneness and family.

The department was also an integral part of the

planning and execution of the 20th Anniversary

Long Services Awards in December. Of the � ve

recipients for long service awards for 20 years,

four were from the Administration and HR

department.

The department also played a key role in leading

a change in the performance management cycle

and began an initiative to review and improve

the process. The department played an integral

role in facilitating local and international training

and development initiatives for staff, as well

as for members of the Of� ce. As part of our

aim to improve customer satisfaction, through

continual improvement, the department

began planning for research, which would

examine and explore the levels of employee

satisfaction and engagement among members

of staff. Employee health and wellness remains

of paramount importance and as such we

continued to ensure that staff had different

options to maintain their health. During the

year, staff participated in the 2018 Sigma 5K

Corporate Run.

With respect to our corporate social

responsibility, members of staff contributed

cash and kind to the Labour Day project at the

Bel� eld Basic School in Bel� eld, St. Mary.

The department also continued to ensure that

the required physical amenities were available

for staff in order for them to comfortably carry

out their functions and to serve our customers.

ROLANDO JOHNSONRecords Clerk

LORRAINE BAKERTelephone Operator/ Receptionist

OUR staff participated in the Sigma run on 2018 February 18.

KENARDO CAMPBELLClerical Assistant

We continued to ensure the prudent

management and maintenance of its � xed

assets and capitalise on the QSM to improve the

systems and processes.

PROCUREMENT OF GOODS, GENERAL, AND CONSULTANCY SERVICES The objectives of the Procurement Unit is

to ensure that procurement activities are

carried out with due consideration for the key

principles of the government’s procurement

policy. These principles include: ensuring value

for money, economy, ef� ciency, equity, fairness,

transparency, and reliability in the use of the

organisation's resources while adhering to the

procurement procedures, as outlined in the

Government of Jamaica Handbook of Public

Sector Procurement Procedures.

The Procurement Unit remained watchful in

ensuring that all procurement was conducted

in accordance with prescribed guidelines/

procedures. This meant ensuring that

the organisation was fully compliant with

the Government of Jamaica Procurement

Procedures. This vigilance was evident in the

timely submission of the Quarterly Contract

Awards (QCA) Reports to the then Integrity

Commission. During the period, fourteen (14)

contracts were awarded; seven (7) consultancy

services and seven (7) goods and services.

RECORDS AND INFORMATION MANAGEMENT (RIM) UNITThe RIM Unit continued to make a signi� cant

contribution to the operations of the OUR by

facilitating the management of documents,

records, and information in the possession,

custody, and control of the OUR. The Unit

continued to play a critical role in the QMS

by helping to guide the revision and approval

process for documented information that

is linked to core and mandatory processes.

During 2017/2018, the RIM Unit also continued

to maintain responsibility for the control

of documented information such as forms,

templates, policies, procedures, guidelines, and

manuals. In addition to managing active and

semi-active records and documents, the Unit

was also deliberate in its management and

maintenance of inactive records. As part of its

work, the Unit also identi� ed and sought to

preserve records that would form an important

part of the institutional memory of the OUR.

JOAN BAILEY-BANTONOf� ce Attendant

GRANVILLE MCKOYSecurity Of� cer/ Driver

SHIRLEY STEWARTDriver/ Messenger


The department directs the � nancial management functions of the OUR,

ensuring effective planning and utilisation of � nancial resources in an accurate

and timely manner.

The main functions of the Finance department include:• Developing and reviewing the accounting system, procedures and

internal controls;• Preparing monthly and annual � nancial statements;• Managing the OUR’s investment portfolio;• Preparing analytic reports to assist the decision-making processes of the

Of� ce;

DUHANEY SMITHFinancial Controller

DESLYN NWUDEBudget Of� cer

LAVERNE SMALLAccountant

RENAE GAYLESenior Accounting Clerk

FINANCE


• Determining annual regulatory fees chargeable to each utility sector;

• Ensuring compliance with statutory requirements and in particular, the provisions of the Public Bodies Management and Accountability (PBMA) Act. The Financial Administration and Audit (FAA) Act, Income Tax Act, and the Government’s Procurement Guidelines;

• Assisting with the negotiations for the group health and general insurance; and

• Providing administrative support for the group pension plan

As is evident from the � nancials which are a part of this report the department has ensured that the � nancial affairs of the OUR were kept in good order during the course of the year.

SHAVOUY DRAKEAccounting Clerk

SHENNEL-ANN REYNOLDSAccounting Clerk

BEVERLEY ROBINSONAdministrative Assistant



The Internal Audit Unit is responsible for providing an independent and

objective appraisal of the OUR’s operations. The Unit’s aim is to foster

improved effective internal controls and corporate governance using a systematic,

disciplined approach and best practices. Our independence is maintained by

reporting directly to the Of� ce’s Audit Committee.

For the 2017/2018 � nancial year, Internal Audit assisted the OUR to maintain its

certi� cation to the Quality Management System ISO 9001:2008 and aided in the

transition process to ISO 9001:2015. The OUR has the distinction of being one

of the few regulatory bodies world-wide which has attained this international

accreditation.

Internal Audit remained committed to helping the organisation achieve its overall

goals and continued to support it by providing value-added solutions through

audits and advisory services. Process audits are a requirement under the quality

management system, as such, the Unit has the responsibility to schedule, plan

and execute these audits according to the 9001 Standard. Operational audits

were planned and executed with input from the Director General and the Of� ce’s

Audit Committee.

During the review period, there were four (4) externally conducted audits under

the quality management system as follows: surveillance, transition and two (2) on

the internal audit process.

INTERNAL AUDIT

HOPE JAMESChief Internal Auditor

K. ANTONIO MULLINGSInternal Auditor

With a complement of two (2) auditors, the Internal Audit Unit completed

audit assignments as follows:

Table 1

Types of Assignments Planned 2017/2018 Achieved 2017/2018

Operational 16 5

Process 2 2

Special Activities 0 19

Total 18 26

Table 2

Process AuditsPercentage

ImplementedOperational

AuditsPercentage

Implemented

Total � ndings 2017/2018 8753%

5430%

Implemented during 2017/2018 46 16

Total � ndings from previous years brought forward into 2017/2018

48

69%

40

33%Previous years � ndings implemented during 2017/2018

33 13

With the support of the Director General and

the Of� ce’s Audit Committee, corrective actions

implemented in the 2017/2018 year increased

by just under 50% over the previous year. This

resulted in clearer procedures, improved operations

and increased alliance with best standards and

international practices.

The Director General and members of the Of� ce’s

Audit Committee reviewed audit � ndings.

Table 3

Findings Generated & Implemented

2016/2017 2017/2018Percentage Increase/Decrease

Operational 27 16 -41%

Process 15 46 207%

Total 42 62 48%

Figure 1

Figure 2


PRODUCTIVITY OF INTERNAL AUDIT

Table 4 shows that there were increases in the number of assignments completed by Internal Audit for the 2017/2018 reporting period when compared with 2016/2017.

Table 4

Types of Assignments

Completed 2016/2017

Completed 2017/2018

PercentageIncrease

Operational 4 5 25%

Process 1 2 100%

Special Reviews 6 19 217%

Total 11 26 136%

Available audit hours spent as follows:In order to remain relevant, auditors continued their professional development through relevant internal and external sources.

Internal Audit Unit plans for the 2018/2019 year includes: • Operational Audits 22• Process Audits 2• Special Activities Executed as requested by the Director General

and the Audit Committee

The priority of the Unit for the 2018/2019 � nancial year will be to help the OUR maintain the transition to the 2015 Standard of the ISO 9001 Quality Management System, while continuing to provide an independent assessment of the operations and necessary advisory services to all functions.


Figure 3

Figure 4

CONSUMER ADVISORY COMMITTEE ON

UTILITIES (CACU)

YASMIN CHONGChairperson

From left, the members of the CACU are Carolyn Ferguson,

Wayne Grant, Kadian Birch, Stephen Wedderburn, Yasmin Chong

(Chairperson) and Erwin Burton. Missing: Paul Goldson.

Over the reporting period, the seventeen-year-old Consumer Advisory

Committee on Utilities (CACU) remained steadfast in its mandate to

ensure and safeguard utility consumers’ rights thereby making certain that utility

customers’ views, opinions and issues are heard throughout the utility policy

and regulatory decision-making process. Constructive representation continued

in order to manage the numerous and evolving challenges of the utility sector.

However, despite the delays and challenges I am pleased to report that some

progress was made in the interest of all stakeholders and more signi� cantly for

consumers. Safe, reliable and affordable utility services are pivotal to economic

growth and it is therefore imperative that we maintain engagement with industry

players, to realize a smart, ef� cient and intelligent utility infrastructure and

regulatory environment.

In the electricity sector, the focus was on the annual tariff adjustment � ling by JPS within the context of the new revenue cap in addition to the construction of JPS’ 190 MW gas-� red plant, the construction of the Eight Rivers 37 MW solar farm in Westmoreland, guaranteed and overall standards, customer service issues and complaints received directly from consumers and public education initiatives.


Water and sewerage also received its fair share of attention, with the review and evaluation of the NWC’s mid-term tariff review, the review of small providers’ rates and regulatory rules, the implementation of upgrades and improvement projects, the customer service issues and billing complaints. The highlights from the telecommunications sector focused on regulatory rule-making determinations for the introduction of a long-run incremental cost structure and infrastructure sharing and the CACU’s successful lobbying efforts to force the implementation of 10-digit dialling and the introduction of a new area code for Jamaica in 2018.

The CACU continued its active engagement with local media and attendance at several community engagements in residential communities and business organisations. The Committee’s Instagram page will be revamped during the 2018/2019 �nancial year and although late, the Facebook and Twitter pages will go live in the second quarter of 2018/2019. Training for the CACU membership remained a priority and two (2) members bene�tted from training activities locally and overseas through the Committee’s membership in the National Association of State Utilities Consumer Advocates (NASUCA), workshops hosted by the OUR and other regulated utilities, participation in webinars as well as at the Public Utilities Research Centre (PURC) at the University of Florida (UF). The Committee also welcomed one new member to strengthen its technical capacity needed for the work programme and

to respond to the expected tariff reviews in 2018 and 2019.

For the 2018/2019 regulatory year, the CACU will commence a study on the impact of non-technical losses on the mobile/landline, water and electricity markets. To complement the losses initiative, plans are being put in place for a CACU-led score-card on Jamaica’s energy, telecommunications and water and sewerage infrastructure. The Committee will continue to support the OUR and the Consumer Affairs Commission (CAC) consumer education and empowerment programmes, complete and present its �nding on industry losses/theft, be responsive to regulatory consultations and notices of proposed rule-making, make representation for the introduction of service standards for the telecommunications sector and provide input to the consultative process for the upcoming tariff reviews for the JPS and NWC.

Throughout the new regulatory year, the CACU is committed to continuing the tireless stakeholder efforts and engagement on behalf of all utilities stakeholders across Jamaica. Another hectic year of hard work is expected with partner organisations and I take this opportunity to encourage all consumers to participate and support the advocacy effort, especially during the upcoming tariff review processes.

We remain resolute in our promise to contribute to the development of a modern, ef�cient

and affordable utility sector and to ensuring the widest possible and active stakeholder participation, as we work towards achieving the national goal of making Jamaica the best in class utility infrastructure market globally and the preferred place to live, work, raise families and conduct business.


20TH ANNIVERSARYCELEBRATIONSOn 2017 December 9, the OUR held its 20th Anniversary Long Service Awards. Staff members, their families and OUR Stakeholders were in attendance for the night. Twenty (20) year awardees (from left): Maurice Charvis, Venetia Cooke, Carolyn Young, Ingrid Brown-Cripps and Shirley Stewart.


1

2

3

4

5

LONG SERVICE AWARDS

1 Ten to fourteen year awardees: (seated

from left) Beverley Green, Carlene Dunbar,

Beverley Robinson, Sashana Miller, Lorraine

Baker and Renae Gayle. (Standing from

left): Cedric Wilson, Jodian Coultman,

Shanique Nunes, Andrew Williams, Collette

Goode, Francine Brown-Thomas, Wayne

McGregor, Kishana Munroe and Otis

Anderson.

2 Five to nine year awardees (from left):

Winston Robotham, Hope James, Andre

Lindsay, Cheryl Lewis, Leighton Hamilton,

Chenée Riley, Peter Johnson, Elizabeth

Bennett-Marsh and Hopeton Heron.

3 Jeremy C. Taylor, Senior Deputy Director

of Public Prosecutions, Office of the Director

of Public Prosecutions, addressing OUR staff

members.

4 Director General Ansord Hewitt (centre),

introduces his lovely wife to Chairman,

Joseph Matalon.

5 Twenty year veteran and Personnel/

Administration Officer, Ingrid Brown-

Cripps receives her award.

6 Chairman of the the Organisation of

Caribbean Utility Regulators (OOCUR),

Clayton Blackman (left) engages in

conversation with FLOW’s Kayon Wallace,

Ambassador Peter Black and Joseph

Matalon. 6

83 ANNUAL REPORT 2017-2018OFFICE OF UTILITIES REGULATION 83

LONG SERVICE AWARDS

7 Director General Ansord E. Hewitt, former

DG J. Paul Morgan and retired President of

Airports Authority of Jamaica, Earl Richards,

engage in dialogue at the 20th Anniversary

Long Service Awards.

8 Mrs. Carolyn Young is recognised as OUR’s

longest serving employee. She was the first

employee, serving the organisation since its

inception.

9 v Singer/ Songwriter Etana serenades Manager

of Monitoring & Enforcement, Peter Johnson.

10 Fifteen to nineteen year awardees: Nova

Barnett and Ansord E. Hewitt.

11 Chairman, Joseph Matalon (left) speaks

with Office members Yasmin Chong and Noel

daCosta.

7

10

9

8

11


1 Members of the OUR family attend the 20th

Anniversary Church Service held in 2017 April 21 at

the Boulevard Baptist Church.

2 Manager – Engineering & Technical Analysis,

Courtney Francis, addresses the audience at a

productivity workshop on “Emerging Regulatory

Issues” held in collaboration with the Caribbean

Development Bank (CDB) and the United States

Agency for International Development Caribbean

Clean Energy Programme (USAID – CARCEP) on 2018

February 6-7 at the Spanish Court Hotel.

3 Member of the Office, Yasmin Chong poses a

question at the presentation of findings for OUR’s

Mystery Shopping exercise carried out in 2017 July

and August at branches of the four (4) major utility

companies in Jamaica.

4 Sponsors, University of Technology demonstrate

to students how to crimp cables at the OUR’s Girls in

ICT event held in April 2017.

5 Telecommunications Engineer, Gordon Swaby

addresses Government ministries and agencies at an

NPA Sensitisation session in Kingston on 2017 July

25.

2

1

CORPORATEHIGHLIGHTS

4

3 5

85OFFICE OF UTILITIES REGULATION ANNUAL REPORT 2017-2018OFFICE OF UTILITIES REGULATION ANNUAL REPORT 2017-2018

6 Everyone is all smiles for the OUR’s Girls in ICT

Day 2017. Director, Consumer & Public Affairs,

Yvonne Nicholson (back left) poses with some

students and their teacher eager for the day

ahead. Girls in ICT Day was celebrated on 2017

April 27 at the Jamaica Pegasus.

7 Ambassador Peter Black has a conversation

with students from Immaculate Conception High

School who attended the Natural Gas Conference

because of their interest in becoming engineers. (L-

R) – Jhenelle Christie, Sharmalee Wright, Kianna

Freeman and Gabrielle Gayle.

8 Some members of the Planning Committee

of the Jamaica Natural Gas Conference from the

OUR and the Petroleum Corporation of Jamaica

(PCJ). (L-R backrow) Demi-Ann Griffiths (Intern,

PCJ), Ashlyn Malcom (Group Internal Auditor, PCJ),

Hopeton Heron (Deputy Director General, OUR),

Yvonne Nicholson (Director, Consumer & Public

Affairs, OUR), Ambassador Peter Black (Secretary

to the Office, OUR), (L-R front row) Ansord

Hewitt (Director General, OUR), Shalene Davis

(Administrative Assistant, PCJ), Camille Taylor

(Manger, Corporate Affairs & Communications,

PCJ), Thalia McPherson (Project & Research Officer,

OUR), Winston Watson (Group General Manager,

PCJ) and Brian Richardson (Manager, Oil & Gas,

PCJ).

9 Regulatory Engineer, Andre Lindsay, presents

on “Distributed Energy Resources” at the Annual

Engineers’ Week Conference, hosted by the Jamaica

Institute of Engineers on 2017 September 18.

10 Director General, Ansord Hewitt and OUR

Electricity Consultant, Valentine Fagan exchange

words with Oliver Clarke, Chairman of the RJR/

Gleaner Group at the ground breaking of the Eight

Rivers Solar Plant which is the largest in the Caribbean

in Paradise Park, Westmoreland on 2017 December

13.

6

9

8

7

10

8686 ANNUAL REPORT 2017-2018OFFICE OF UTILITIES REGULATION ANNUAL REPORT 2017-2018

A student from St. Georges’ College asks a question of the utility providers at our final Schools’ Connections held at Ardenne High School on 2018 February 21.

Gordon Brown, Public Affairs Coordinators discusses some of the concerns of our consumers with a Flow representative.

Manager, Regulation and Policy ‐ICT, Evona Channer (left), discusses potential implications of the workshop with Cecil McCain, Director, Post and Telecommunications at Ministry of Science, Energy and Technology (centre) and Mr. Sylvester Cadette (left), ITU Programme Officer for the Caribbean Region at the ICT Indicators Workshop at Hotel Four Seasons on 2018 March 27‐28 organized jointly by the OUR and MSET.

11

12

14

15

13

11 Telecommunications consultant, Curtis Robinson,

presents to stakeholders at the Jamaica Pegasus Hotel

on 2017 July 25 as a part of sensitisation efforts for the

additional area code, '658', for Jamaica.

12 OUR’s Parish Connections Series continued in

St. James, St. Ann, Trelawny and closed in Kingston.

Parish Connections have been the signature

outreach event where the OUR travelled across the

island bringing consumers in direct contact with

utility providers. OUR staff members are always

happy to share memorabilia with consumers when

they travel. Jade-Anne James, Consumer Affairs

Officer, (right) poses as she gives a consumer a token

in St. Ann in August 2017

13 Nicole Morgan, Legal Counsel, chats with a

customer about the role of the OUR at a consumers’

Expo in St. Ann on 2017 September 21.

14 A student from St. Georges’ College asks a

question of the utility providers at our final Schools’

Connections at Ardenne High School on 2018

February 21.

15 Gordon Brown, Public Affairs Coordinator

discusses some of the concerns of our consumers

with a Flow representative.

16 Manager, Regulation and Policy - ICT, Evona

Channer (left), discusses potential implications of

the workshop with Cecil McCain, Director, Post and

Telecommunications at Ministry of Science, Energy

and Technology (MSET) (centre) and Sylvester

Cadette, ITU Programme Officer for the Caribbean

Region at the ICT Indicators Workshop on 2018

March 27-28 organized jointly by the OUR and

MSET.

16

87 ANNUAL REPORT 2017-2018OFFICE OF UTILITIES REGULATION ANNUAL REPORT 2017-2018


ORGANISATIONAL CHART

Committees of the Of�ce

1. Audit & Conduct

2. Finance & Budget

3. HR & Compensation

4. Legal Af�ars

5. Technical

THE OFFICE6 Non-Executive Members

& Director General (ex of�cio)

THE EXECUTIVESDirector General - 269035

Deputy Director General - 269036Deputy Director General - 269037

Executive Assistant269038

Chief InternalAuditor302705

Internal Auditor305927

General Counsel269061

Deputy General Counsel269065

AdministrativeAssistant269063

Senior Legal Counsel269064

Legal Counsel302712

SPECIALIST CONSULTANTS

1. Power System2. Regulatory Economist3. Transmission Planning4. Numbering & ICT Networks

Project Coordinator/

Executive Assistant269079

Director- Regulations, Policy,

Monitoring & Enforcement

269082

Director- Information

Technology & Risk269086

Director- Administration/Human Resource

269040

Manager- Solution Development

& Risk269087

Manager- System & Security

269089

SolutionDeveloper

302713

Graphic Officer/Help Desk

Coordinator305926

IT SecurityOfficer269088

Admin. Assistant269041

Secretary to The Of�ce269078

Financial Controller269055

DirectorConsumer & Public Affairs

269048

Admin. Assistant269049

Licensing Officer305925

Accountant269056

Budget Officer269058

SeniorAccounting Clerk

302711

Accounting/Data Entry Clerk

269057

Coordinator- Consumer Affairs

(Operations)269051

Consumer AffairsOfficers (4)

269053269054269052302708

Specialist- Consumer Affairs

(Policy)269050

Public EducationSpecialist302709

Coordinator- OURIC/Information

Officer302710

Coordinator- Public Affairs

269059

Manager- Regulatory &

Licensing Affairs269080

Project/Research Officer

269081

Manager- Records & Info. Mgt.

302709

Senior Records & Information Mgt. Officer

305928

Records & Info.Mgt. Officers (2)

305929-30

Records Clerk305931

Security Officer/Driver302707

Personnel/Admin. Officer

269042

Procurement/Purchasing Officer

269043

AssistantProcurement Officer

305932

Driver/Messenger

269044

TelephoneOperator/

Receptionist269045

Office Attendant269046

Clerical Assistant269047

Manager- Regulations &

Policy - ICT269085

Manager- Engineering &

Technical Analysis269077

Manager- Monitoring & Enforcement

269071

Manager- Regulation &

Policy - Electricity, Water & Sewerage

269066

Analysts- Telecoms (2)

269069269070

Telecoms Engineer269072

Engineers (2)302717302716

UtilityAnalysts (2)

302714302715

Analysts- Water & Electricity

(2)302718269073


Position of Senior Executive Year Basic Salary$

Gratuity$

Travelling/ Deemed Motor Vehicle

Allowance$

Pension Benefits

$

Other Allowances

$

Non-cash benefits

$

Total

Director General 2017/2018 12,113,491 3,028,373 140,000 None 90,000 427,557 15,799,420.04

Deputy Director General (Telecommunications) 2017/2018 11,743,685 2,935,921 140,000 None 90,000 389,951 15,299,557

Deputy Director General (Electricity & Water) 2017/2018 11,113,536 2,778,384 140,000 None 90,000 494,130 14,616,050

General Counsel 2017/2018 9,034,864 None 1,341,624 700,181 120,000 305,927 11,502,596.04

Director - Regulation, Policy, Monitoring & Enforcement

2017/2018 7,907,667 1,976,917 1,341,624 None 90,000 408,207 11,724,414

Director - Administration & Human Resource1 2017/2018 5,157,828 None 1,341,624 428,100 90,000 218,088 7,235,640

Director - Administration & Human Resource2 2017/2018 1,270,528 317,632 1,341,624 None 90,000 18,140 3,037,924

Director - Consumer and Public Affairs 2017/2018 7,070,763 None 1,341,624 547,968 90,000 504,228 9,554,583

Director - Information Technology & Risk 2017/2018 8,469,457 2,117,364 1,341,624 None 90,000 554,873 12,573,318

Secretary to the Office 2017/2018 8,470,190 2,117,548 1,341,624 None 90,000 - 12,019,362

Financial Controller3 2017/2018 4,011,644

1,002,911 1,341,624 None 90,000 250,782 6,696,961

Financial Controller4 2017/2018 3,529,244 882,311 1,341,624 None 90,000 174,760 6,017,939

1 Tenure Apr. 2017 to Dec. 20172 Tenure 2018 January - March3 Tenure 2017 April - October4 Tenure 2017 November - 2018 March

SENIOR MANAGEMENT COMPENSATION


FINANCIALSTATEMENTSIndependent Auditors' Report to the Members 91FINANCIAL STATEMENTS

Statement of Comprehensive Income 93Statement of Financial Position 93Statement of Changes to Reserve 94Statement of Cash Flows 94Notes to the Financial Statements 95


OFFICE OF UTILITIES REGULATIONFINANCIAL STATEMENTS 2017/2018

Page 4 OFFICE OF UTILITIES REGULATION

STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 MARCH 2018

(Restated) Note 2018 2017 $’000 $’000 REVENUE 6 721,636 717,054* Other operating income 7 9,988 6,068 731,624 723,122* Administrative and other expenses 8 (715,201) (746,021) 16,423 ( 22,899) Interest income 19,486 18,254 NET SURPLUS/(DEFICIT) 35,909 ( 4,645) OTHER COMPREHENSIVE INCOME: Items that will not be reclassified to statement of income – Remeasurement (loss)/gain of the defined benefit obligation ( 51,514) 6,983 Remeasurement loss of the pension plan assets ( 16,999) ( 9,780) ( 68,513) ( 2,797) TOTAL COMPREHENSIVE INCOME ( 32,604) ( 7,442)* * Restated


OFFICE OF UTILITIES REGULATION FINANCIAL STATEMENTS 2017/2018


STATEMENT OF CHANGES IN RESERVES


Retirement Retained Benefit Reserve Earnings Total $’000 $’000 $’000 BALANCE AT 1 APRIL 2016 (As previously stated) 74,312 479,844 554,156 Prior year adjustment (note 24) - (113,850) (113,850) BALANCE AT 1 APRIL 2016 (Restated) 74,312 365,994 440,306 TOTAL COMPREHENSIVE INCOME Net deficit - ( 4,645) ( 4,645) Other comprehensive income ( 2,797) - ( 2,797) ( 2,797) ( 4,645) ( 7,442) TRANSFER BETWEEN RESERVES Transfer to retirement benefit reserve 12,709 ( 12,709) - . 9,912 ( 17,354) ( 7,442) BALANCE AT 31 MARCH 2017 (Restated) 84,224 348,640 432,864 TOTAL COMPREHENSIVE INCOME Net surplus - 35,909 35,909 Other comprehensive income (68,513) - ( 68,513) (68,513) 35,909 ( 32,604) TRANSFER BETWEEN RESERVES Transfer to retirement benefit reserve 15,085 ( 15,085) - . (53,428) 20,824 ( 32,604) BALANCE AT 31 MARCH 2018 30,796 369,464 400,260


STATEMENT OF CASH FLOWS


(Restated) 2018 2017 $’000 $’000 CASH FLOWS FROM OPERATING ACTIVITIES: Net surplus/(deficit) 35,909 ( 4,645)* Items not affecting cash resources: Depreciation 20,401 17,377 Retirement benefit expense 853 3,213 Interest income ( 19,486) ( 18,254) Exchange loss/(gain) on foreign balances 2,239 ( 1,933) Deferred income 18,786 23,600* Movement in bad debt provision ( 13,997) ( 13,100)

Gain on disposal of property, plant and equipment ( 118) ( 4,135). 44,587 2,123 Changes in operating assets and liabilities: Receivables ( 43,292) 40,134 Payables 28,976 ( 49,086) Taxation recoverable ( 4,714) ( 4,579) Retirement benefit contributions paid ( 15,938) ( 15,922) Cash provided by/(used in) operating activities 9,619 ( 27,330) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 18,945 18,497 Proceeds from disposal of property, plant and equipment 118 4,135 Purchase of property, plant and equipment ( 27,769) ( 32,466) Short term investments ( 41,960) ( 46,462) Cash used in investing activities ( 50,666) ( 56,296) DECREASE IN CASH AND CASH EQUIVALENTS ( 41,047) ( 83,626) Exchange (loss)/gain on foreign cash balances ( 1,398) 1,933 Cash and cash equivalents at beginning of year 423,121 504,814 CASH AND CASH EQUIVALENTS AT END OF YEAR (note 16) 380,676 423,121 * Restated




NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):

(a) Basis of preparation (cont’d) The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the organization’s accounting policies. Although these estimates are based on management’s best knowledge of current events and action, actual results could differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4.

New, revised and amended standards and interpretations that became effective during the year Certain new standards, interpretations and amendments to existing standards have been published that became effective during the current financial year. The organization has assessed the relevance of all such new standards, interpretations and amendments and has concluded that there are no new standards, interpretations and amendments which are immediately relevant to its operations. New standards, amendments and interpretations not yet effective and not early adopted

The following new standards, amendments and interpretations, which are not yet effective and have not been adopted early in these financial statements, will or may have an effect on the organization’s future financial statements:

IFRS 9, 'Financial Instruments', (effective for accounting periods beginning on or after 1 January 2018). The standard addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial assets and liabilities, including a new expected credit loss model for calculating impairment of financial assets and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. Although the permissible measurement bases for financial assets – amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) - are similar to IAS 39, the criteria for classification into the appropriate measurement category are significantly different. IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model, which means that a loss event will no longer need to occur before an impairment allowance is recognised.



31 MARCH 2018

1. IDENTIFICATION AND PRINCIPAL ACTIVITY: (a) The Office of Utilities Regulation (OUR) was established by the Office of

Utilities Regulation Act 1995, which has since been amended by the Office of Utilities Regulation (Amendment) Act, 2000 and 2015. The registered office of the organization is 36 Trafalgar Road, Kingston 10.

(b) The main activity of the organization is regulating the provision of utility services

throughout Jamaica in the following sectors:

Electricity Telecommunications Water and sewage

This includes receiving and processing all applications for licenses to provide utility services as defined under the Act, set rates where applicable and to monitor the operations of such utilities, ensuring that consumers are provided with adequate levels of service, that the needs of the community are met and that the environment is protected.

(c) The OUR is exempt from income tax pursuant to section 12 (b) of the Income Tax Act.

The organization is designated a tax withholding entity under the General Consumption Tax Act.

2. REPORTING CURRENCY:

Items included in the financial statements of the organization are measured using the currency of the primary economic environment in which the organization operates (‘the functional currency’). These financial statements are presented in Jamaican dollars, which is considered the organization’s functional and presentation currency.

3. SIGNIFICANT ACCOUNTING POLICIES:

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), and have been prepared under the historical cost convention. They are also prepared in accordance with the requirements of the Office of Utilities Regulation Act.





31 MARCH 2018


(a) Basis of preparation (cont’d) New standards, amendments and interpretations not yet effective and not early adopted (cont’d)

IFRS 9, 'Financial Instruments', (effective for accounting periods beginning on or after 1 January 2018) (cont’d)

There is a ‘three stage’ approach which is based on the change in credit quality of financial assets since initial recognition. In practice, the new rules mean that entities have to record an immediate loss equal to the 12-month ECL on initial recognition of financial assets that are credit impaired (or lifetime ECL for trade receivables). Where there has been a significant increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL. The model includes operational simplifications for lease and trade receivables.

IFRS 15, 'Revenue from Contracts with Customers', (effective for accounting periods beginning on or after 1 January 2018). The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction Contracts' and related interpretations.

IFRS 16, 'Leases', (effective for accounting periods beginning on or after 1 January 2019). The new standard eliminates the classification by a lessee of leases as either operating or finance. Instead all leases are treated in a similar way to finance leases in accordance with IAS 17. Leases are now recorded in the statement of financial position by recognizing a liability for the present value of its obligation to make future lease payments with an asset (comprised of the amount of the lease liability plus certain other amounts) either being disclosed separately in the statement of financial position (within right-of-use assets) or together with property, plant and equipment. The most significant effect of the new requirements will be an increase in recognized lease assets and financial liabilities. An optional exemption exists for short term and low-value leases. The accounting by lessors will not significantly change.

The organization is assessing the impact that these standards and amendments to standards will have on the financial statements when they are adopted.

(b) Foreign currency translation

Foreign currency transactions are accounted for at the exchange rates prevailing at the dates of the transactions. Monetary items denominated in foreign currency are translated to Jamaican dollars using the closing rate as at the reporting date.



31 MARCH 2018


(b) Foreign currency translation (cont’d)

Exchange differences arising from the settlement of transactions at rates different from those at the dates of the transactions and unrealized foreign exchange differences on unsettled foreign currency monetary assets and liabilities are recognized in the statement of comprehensive income.

(c) Property, plant and equipment

Items of property, plant and equipment are recorded at historical or deemed cost, less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the organization and the cost of the item can be measured reliably. All repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation is calculated on the straight line basis at such rates as will write off the carrying value of the assets over the period of their expected useful lives. Annual rates of property, plant and equipment are as follows: Leasehold improvements 10% Furniture and fixtures 10% Office machinery and equipment 10% Motor vehicles 20% Computer equipment 33 1/3% Gains and losses on disposals of property, plant and equipment are determined by reference to their carrying amounts and are taken into account in determining profit or loss.

(d) Impairment of non-current assets

Property, plant and equipment and other non-current assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the greater of an asset’s net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest level for which, there are separately identified cash flows. Non financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.



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OFFICE OF UTILITIES REGULATION


31 MARCH 2018 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):

(e) Financial instruments (cont’d)

Financial assets (cont’d) (ii) Recognition and Measurement

Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the organization commits to purchase or sell the asset. Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the organization has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value, with fair value gains or losses being recorded in other comprehensive income. Loans and receivables are subsequently carried at amortised cost using the effective interest method, less provision for impairment.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts), through the expected life of the financial asset, or where appropriate, a shorter period.

The organization assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

For loans and receivables impairment provisions are recognized when there is objective evidence that the organization will not collect all of the amounts due under the terms receivable. The amount of the provision is the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables which are reported net, such provisions are recorded in a separate allowance account with the loss being recognized in the statement of comprehensive income. On confirmation that the trade receivable is uncollectible, it is written off against the associated allowance. Subsequent recoveries of amounts previously written off are credited to the statement of comprehensive income.



31 MARCH 2018


(e) Financial instruments

A financial instrument is any contract that gives rise to both a financial asset in one entity and a financial liability or equity in another entity.

Financial assets (i) Classification

The organization classifies its financial assets in the following categories: loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables) but also incorporate other types of contractual monetary asset.

The organization’s loans and receivables comprise trade and other receivables and cash and cash equivalents. They are included in current assets, except for maturities greater than 12 months after the reporting date. These are classified as non-current assets.

Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand and short term deposits with original maturity of three months or less.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the financial asset within 12 months of the reporting date. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale.



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31 MARCH 2018 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):

(e) Financial instruments (cont’d)

Financial liabilities

The organization’s financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest method. At the reporting date, the following items were classified as financial liabilities: non-current liability and payables.

(f) Borrowings

Borrowings are recognized initially at the value of proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method. Any difference between proceeds, net of transaction costs, and the redemption value is recognized in the statement of comprehensive income over the period of the borrowings.

(g) Employee benefits Defined contribution plans

The organization operates a defined benefit plan, the assets of which are generally held in a separate trustee-administered fund. A defined benefit plan is a pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. The plan is generally funded through payments to a trustee-administered fund, determined by periodic actuarial calculations.

The asset or liability recognised in the statement of financial position in respect of the defined benefit pension plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Actuarial gains and losses arising from Experience Adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Other Other employee benefits that are expected to be settled wholly within 12 months after the end of the reporting period are presented as current liabilities.



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(g) Employee benefits (cont’d)

Other (cont’d) A provision is made for the estimated liability for untaken vacation leave as a result of services rendered by employees up to the end of the reporting period.

(h) Provisions

Provisions are recognized when the organization has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognized for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.

(i) Leases

Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statement of comprehensive income on a straight line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which the termination takes place.

(j) Revenue recognition Regulatory fees are recognized in the statement of comprehensive income on an accrual basis. Regulatory fees are measured at the fair value of the consideration receivable.

Interest income is recognized for all interest bearing instruments on an accrual basis unless collectability is doubtful.

Deferred income Deferred income is recognized in the statement of comprehensive income as income earmarked, based on the organization’s approved budget, for specified projects that have either not commenced or have been delayed after commencement and which, after management’s review, will not be completed within the financial year for which completion was projected (note 24).





31 MARCH 2018

4. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D): (b) Key sources of estimation uncertainty (cont’d)

(i) Retirement benefit obligations

The cost of these benefits and the present value of the future obligations depend on a number of factors that are determined by actuaries using a number of assumptions. The assumptions used in determining the net periodic cost or income for retirement benefits include the expected long-term rate of return on the relevant plan assets and the discount rate. Any changes in these assumptions will impact the net periodic cost or income recorded for retirement benefits and may affect planned funding of the pension plan. The expected return on plan assets assumption is determined on a uniform basis, considering long-term historical returns, asset allocation and future estimates of long-term investment returns. The organization determines the appropriate discount rate at the end of each year, which represents the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the retirement benefit obligations. In determining the appropriate discount rate, the organization considered interest rate of high-quality Government of Jamaica bonds that are denominated in the currency in which the benefits will be paid, and have terms to maturity approximating the terms of the related obligations. Other key assumptions for the retirement benefits are based on current market conditions.

(ii) Depreciable assets

Estimates of the useful life and the residual value of property, plant and equipment are required in order to apply an adequate rate of transferring the economic benefits embodied in these assets in the relevant periods. The organization applies a variety of methods in an effort to arrive at these estimates from which actual results may vary. Actual variations in estimated useful lives and residual values are reflected in the statement of comprehensive income through impairment or adjusted depreciation provisions.

5. FINANCIAL RISK MANAGEMENT:

The organization is exposed through its operations to the following financial risks:

- Credit risk - Fair value or cash flow interest rate risk - Foreign exchange risk - Other market price, and - Liquidity risk

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31 MARCH 2018


(k) Grants The organization receives the following types of grants: (i) Revenue grants

Revenue grant which covers operating expenses is recognized as income in the statement of comprehensive income over the period necessary to match it with the related cost for which it is intended to compensate. Any unspent portion will be written back to income.

(ii) Capital grants

Capital grant is received for the exclusive purpose to aid in the acquisition of property, plant and equipment. Capital grant is recognized as deferred income initially and upon acquisition of property, plant and equipment is written off to the statement of comprehensive income as income on a systematic basis which coincides with the estimated useful lives of the related assets and which is consistent with the depreciation policy. Any unspent portion will be written back to income.

4. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES:

Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. (a) Critical judgements in applying the organization’s accounting policies

In the process of applying the organization’s accounting policies, management has not made any judgements that it believes would cause a significant impact on the amounts recognized in the financial statements.

(b) Key sources of estimation uncertainty

The organization makes certain estimates and assumptions regarding the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:





31 MARCH 2018

5. FINANCIAL RISK MANAGEMENT (CONT’D):

The organization is exposed to risks that arise from its use of financial instruments. This note describes the organization’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the organization’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. (a) Principal financial instruments

The principal financial instruments used by the organization, from which financial instrument risk arises, are as follows:

- Receivables - Cash and cash equivalents - Short term investments - Long term receivable - Payables - Non-current liability

(b) Financial instruments by category

Financial assets Loans and receivables Available-for-sale 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Short term investments - - 106,736 65,617 Cash and cash equivalents 380,676 423,121 - - Receivables (excluding non-financial assets of $23,288 (2017- $29,348) 129,793 62,641 - - Long term receivable 4,909 8,171 - -

Total financial assets 515,378 493,933 106,736 65,617

Financial liabilities Financial liabilities at amortised cost 2018 2017 $’000 $’000

Payables (excluding non-financial payables of $94,218 (2017 - $82,631) 57,782 40,393 Non-current liability 64,367 64,367 Total financial liabilities 122,149 104,760



31 MARCH 2018


(c) Financial instruments not measured at fair value

The fair values of financial instruments that are not traded in an active market and those that are traded in an active market for which there are no quoted market prices are deemed to be/determined as follows:

(i) The carrying values less any impairment provision of financial assets and

liabilities with a maturity of less than one year are estimated to approximate their fair values due to the short term nature and maturity of these instruments. These financial assets and liabilities are short term investments, cash and cash equivalents, trade receivables and payables.

(ii) The carrying value of the advances from the Government of Jamaica approximates its fair value as determined by the terms and conditions and repayment dates in the agreement (note 23).

(d) Financial risk factors

The Office has overall responsibility for the determination of the organization’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the organization’s finance function. The Office receives monthly reports from the Financial Controller through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The organization’s internal auditors also review the risk management policies and processes and report their findings to the Audit Committee.

The Office has established committees/departments for managing and monitoring risks, as follows:

Finance Department

The Finance Department is responsible for managing the organization’s assets and liabilities and the overall financial structure. It is also primarily responsible for managing the cash flow and liquidity risks of the organization. The department ensures compliance with statutory requirements and in particular, the provisions of the Public Bodies Management and Accountability Act (PBMA), the Financial Administration and Audit Act (FAA), Income Tax Act, and the Government’s Procurement guidelines.

Enterprise Risk Management Team The Audit Committee of the Office provides oversight to the operations of the Enterprise Risk Management Team which provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, credit risk, interest rate risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.





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(d) Financial risk factors (cont’d)

(i) Market risk (cont’d) Currency risk (cont’d) Foreign currency sensitivity The following table indicates the sensitivity of net surplus to changes in foreign exchange rates. The change in currency rate below represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis represents outstanding foreign currency denominated short term investments, cash and cash equivalents, other receivables and payables balances and adjusts their translation at the year-end for 4% (2017 – 6%) depreciation and a 2% (2017 – 1%) appreciation of the Jamaican dollar against the US dollar. The changes below would have no impact on other components of reserves.

Effect on Effect on % Change in Net surplus % Change in Net surplus Currency Rate 31 March Currency Rate 31 March 2018 2018 2017 2017 $’000 $’000 Currency:

USD -4 3,206 -6 5,037 USD +2 (1,603) +1 ( 839)

Price risk Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market. As the organization does not have a significant exposure, market price fluctuations are not expected to have a material effect on the net results. Cash flow and fair value interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Floating rate instruments expose the organization to cash flow interest rate risk, whereas fixed rate instruments expose the organization to fair value interest rate risk.



31 MARCH 2018



The Office has established committees/departments for managing and monitoring risks, as follows (cont’d):

Audit Committee

The Audit Committee oversees how management monitors compliance with the organization’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the organization. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes periodic reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

The overall objective of the Office is to set policies that seek to reduce risk as far as possible without unduly affecting the organization’s flexibility. Further details regarding these policies are set out below:

(i) Market risk

Market risk arises from the organization's use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises from US dollar short term investments, cash and cash equivalents, other receivables and payables. The organization manages this risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. The organization further manages this risk by maximizing foreign currency earnings and holding net foreign currency assets. Concentration of currency risk The organization is exposed to foreign currency risk in respect of US dollars as follows:

2018 2018 2017 2017 J$’000 US$’000 J$’000 US$’000 Short term investments 46,900 376 - -

Cash and cash equivalents 45,736 367 84,221 659 Other receivables - - 137 1 Payables (12,482) (101) ( 408) ( 3)

80,154 642 83,950 657





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(d) Financial risk factors (cont’d) (i) Market risk (cont’d)

Cash flow and fair value interest rate risk (cont’d) Short term investments and cash and cash equivalents are the only interest bearing assets within the organization. The organization’s short term investments and cash and cash equivalents are due to mature within 12 months and 3 months of the reporting date respectively. Interest rate sensitivity There is no significant exposure to interest rate risk on short term investments, as these deposits have a short term to maturity and are constantly reinvested at current market rates.

(ii) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Credit risk arises from short term investments, trade and other receivables and cash and cash equivalents. Trade receivables The organization is a regulatory body and its customer base consists of entities falling within the utility sectors. The organization has policies in place to ensure that these entities are legitimate and have a strong financial base. The organization manages its credit risk by screening its licensees and putting in place procedures geared towards recovery of amounts owed. The organization establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables. The organization’s average credit period is 30 days. Allowances for impaired trade receivables are recognized based on an estimate of amounts that would be irrecoverable which is determined by past default experience and expected receipts. Cash and cash equivalents Cash transactions are limited to high credit quality financial institutions. The organization has policies that limit the amount of credit exposure to any one financial institution.



31 MARCH 2018



(ii) Credit risk (cont’d)

Maximum exposure to credit risk The maximum exposure to credit risk is equal to the carrying amount of trade and other receivables, short term investments and cash and cash equivalents in the statement of financial position. The aging of trade receivables is:

2018 2017 $’000 $’000

0 – 30 days 68,942 5,466 31 – 60 days 15,684 13,809 61 – 90 days 7,377 13,561 91 days and over 32,115 39,498

124,118 72,334

Trade receivables that are past due but not impaired As at 31 March 2018, trade receivables of $50,543,000 (2017 - $48,238,000) were past due but not impaired. These relate to independent regulated entities for whom there is no recent history of default. Trade receivables that are past due and impaired As of 31 March 2018, the organization had trade receivables of $4,633,000 (2017 - $18,630,000) that were impaired. The amount of the provision was $4,633,000 (2017 - $18,630,000). These receivables were aged over 90 days. Movements on the provision for impairment of trade receivables are as follows:

2018 2017 $’000 $’000

At 1 April 18,630 31,730 Provision for receivables impairment 3,783 7,821 Bad debts recovered, previously provided for ( 300) - Receivables written off during the year as uncollectible (17,480) (20,921) At 31 March 4,633 18,630





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(iii) Liquidity risk (cont’d) Liquidity risk management process The organization’s liquidity risk management process, as carried out within the organization and monitored by the Finance Department, includes: (i) Monitoring future cash flows and liquidity on a daily basis. (ii) Maintaining a portfolio of short term deposit balances that can easily

be liquidated as protection against any unforeseen interruption to cash flow.

(iii) Maintaining committed lines of credit. (iv) Optimizing cash returns on investments. Cash flows of financial liabilities The maturity profile of the organization’s financial liabilities, based on contractual undiscounted payments, is as follows:

Within 1 1 to 2 2 to 5 Year Years Years Total

$’000 $’000 $’000 $’000 31 March 2018 Payables 45,300 - - 45,300 Long term liability 51,810 12,557 - 64,367 Total financial liabilities (contractual maturity dates) 97,110 12,557 - 109,667

Within 1 1 to 2 2 to 5 Year Years Years Total

$’000 $’000 $’000 $’000 31 March 2017 Payables 40,393 - - 40,393 Long term liability - - 64,367 64,367 Total financial liabilities (contractual maturity dates) 40,393 - 64,367 104,760

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(ii) Credit risk (cont’d) Trade receivables that are past due and impaired (cont’d) The creation and release of provision for impaired receivables have been included in expenses in the statement of comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash. Impairment estimates have been adjusted based on actual collection patterns. Concentration of risk – trade receivables

The following table summarizes the organization’s credit exposure for trade receivables at their carrying amounts, as categorized by the utility sector:

2018 2017 $’000 $’000

Telecommunications 24,914 20,915 Electricity 28,157 56 Water 64,399 47,005 Other 6,648 4,358 124,118 72,334 Less: Provision for credit losses ( 4,633) (18,630)

119,485 53,704 (iii) Liquidity risk Liquidity risk is the risk that the organization will be unable to meet its

payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed credit facilities.





31 MARCH 2018

6. REVENUE: (Restated) 2018 2017 $’000 $’000 Regulatory fees 740,302 738,366 Processing fees 120 2,288 740,422 740,654 Less: deferred income ( 18,786) ( 23,600) 721,636 717,054 The following are the major contributors to revenue: 2018 2017 % % Telecommunications sector 40 43 Electricity sector 42 41 Water sector 18 16 7. OTHER OPERATING INCOME: 2018 2017 $’000 $’000 Foreign exchange (loss)/gain ( 1,712) 1,933 Gain on disposal of property, plant and equipment 118 4,135 Other income 11,582 - . 9,988 6,068



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8. EXPENSES BY NATURE: Total direct and administrative expenses: 2018 2017 $’000 $’000

Staff costs (note 9) 495,459 482,219 Office members’ remuneration 9,350 11,750 Telephone 15,010 15,087 Foreign travel 15,691 9,602 Audit fee 1,020 1,216 Motor vehicle expenses 3,816 3,766 Legal and professional fees 58,790 70,527 Bad debts written off 3,783 7,821 Public relations 14,659 31,969 Customer expenses 4,671 5,014 Subscriptions 22,807 29,125 Office rental 25,146 25,574 Repairs and maintenance 6,469 6,854 Advertising and promotion 7,382 3,530 Stationery, printing and postage 1,973 2,011 Office and general expenses 9,177 10,561 OOCUR conference ( 500) 12,018 Gas conference 97 - Depreciation 20,401 17,377

715,201 746,021 9. STAFF COSTS: 2018 2017 $’000 $’000 Salaries, wages and statutory contributions 379,754 360,543 Pension (note 11) 853 3,213 Group life insurance 3,542 4,192 Health insurance 22,464 19,878 Staff training 36,194 40,058 Staff welfare 22,780 20,663 Travelling and subsistence 28,166 31,649 Other staff costs 1,706 2,023 495,459 482,219 The number of persons employed by the organization at the end of the year was 69 (2017 – 72).





31 MARCH 2018

11. POST EMPLOYMENT BENEFIT ASSETS: 2018 2017 $’000 $’000

The amounts recognized in the statement of financial position are determined as follows: Present value of funded obligations (250,593) (206,441) Fair value of plan assets 281,389 290,665 Assets in the statement of financial position 30,796 84,224 The organization operates in a defined benefit plan, which is open to all permanent employees and administered for the Office of Utilities Regulation by Guardian Life Limited. Retirement benefits are based on the average annual earnings in the last three years to retirement, and death benefits on members’ accumulated contributions. The plan is valued annually by independent actuaries, Eckler Consultants + Actuaries, using the Projected Unit Credit Method. The latest actuarial valuation was carried out as at 31 March 2018. The movement in the present value of funded obligations over the year is as follows:

2018 2017

$’000 $’000

Balance at beginning of year 206,441 189,735 Current service cost 8,105 6,880 Interest cost 20,238 16,903 234,784 213,518 Remeasurements – Loss from change in financial assumptions 59,108 2,011 Experience gains ( 7,594) ( 8,994) 286,298 206,535 Members’ contributions 13,510 14,034 Benefits paid ( 49,215) ( 14,128) Balance at the end of the year 250,593 206,441



31 MARCH 2018

10. PROPERTY, PLANT AND EQUIPMENT: Leasehold Furniture Office Computer & Motor Improvements & Fixtures Equipment Accessories Vehicles Total $’000 $’000 $’000 $’000 $’000 $’000 At cost - 1 April 2016 13,519 12,476 16,733 67,593 24,795 135,116 Additions - 3,046 387 3,367 25,666 32,466 Disposal - - - - ( 11,887) ( 11,887) 31 March 2017 13,519 15,522 17,120 70,960 38,574 155,695 Additions - 259 1,099 26,411 - 27,769 Disposal - - - ( 288) - ( 288) 31 March 2018 13,519 15,781 18,219 97,083 38,574 183,176 Depreciation - 1 April 2016 10,057 9,732 7,804 55,054 17,512 100,159 Charge for the year 982 729 1,337 10,279 4,050 17,377 Eliminated on disposal - - - - (11,887) ( 11,887) 31 March 2017 11,039 10,461 9,141 65,333 9,675 105,649 Charge for the year 964 843 1,412 10,504 6,678 20,401 Eliminated on disposal - - - ( 288) - ( 288) 31 March 2018 12,003 11,304 10,553 75,549 16,353 125,762 Net Book Value - 31 March 2018 1,516 4,477 7,666 21,534 22,221 57,414 31 March 2017 2,480 5,061 7,979 5,627 28,899 50,046





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11. POST EMPLOYMENT BENEFIT ASSETS (CONT’D):

The movement in the fair value of the plan assets during the year is as follows:

2018 2017 $’000 $’000

Balance at beginning of year 290,665 264,047 Interest income 28,809 24,192 Remeasurements – Return on plan assets, excluding amounts included in interest income ( 16,999) ( 9,780) Members’ contributions 13,510 14,034 Employer’s contributions 15,938 15,922 Benefits paid ( 49,215) ( 14,128) Administrative fees ( 1,319) ( 3,622) Balance at end of year 281,389 290,665

The amounts recognized in the statement of comprehensive income are as follows:

2018 2017 $’000 $’000

Current service cost 8,105 6,880 Interest cost on obligations 20,238 16,903 Interest income on plan assets (28,809) (24,192) Administrative fees 1,319 3,622 Total included in staff costs 853 3,213



31 MARCH 2018


The distribution of the plan assets was as follows:

2018 2017 % %

Deposit Administration Fund - Equities 13.11 10.61 JA$ bonds 66.09 69.91

US$ bonds 7.73 8.04 Short-term deposits 4.31 1.97 Cash and cash equivalents 4.99 6.15 Real estate 3.77 3.32 100 100

The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current investment portfolio. Expected yields on fixed interest investments are based on gross redemption yields as at the end of the reporting period. Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets.

Expected contributions to the post employment plan for the year ending 31 March 2019 is $15,800,000 (2018 actual - $15,938,000). The actual return on the plan assets was negative $10,491,000 (2017 – positive $10,789,000).

The principal actuarial assumptions used were as follows: 2018 2017 % p.a. % p.a.

Discount rate 7.5 9.5 Inflation rate 5.5 6.5 Future salary increases 4.5 6.5

Post-employment mortality for active members as well as mortality for pensioners and deferred pensioners is based on the 1994 Group Annuity Mortality Tables (GAM 94), projected to the measurement date, using Society of Actuaries Scale AA.





31 MARCH 2018

13. RECEIVABLES: 2018 2017 $’000 $’000 Trade receivables 124,118 72,334 Provision for doubtful debts ( 4,633) (18,630) 119,485 53,704 Due from employees 1,600 3,662 Deposits 13,560 10,984 Prepayments 12,519 18,263 Other 5,917 5,376 153,081 91,989 14. TAXATION RECOVERABLE:

This balance represents withholding tax arising on short term investments and cash and cash equivalents.

15. SHORT TERM INVESTMENTS:

This represents securities purchased under resale agreements with original maturities greater than 90 days but less than one (1) year. The weighted average interest rate on short term investments denominated in Jamaican dollars and United States dollars was 5.16% and 2.10%, respectively (2017 - 5.81% and nil, respectively). These investments mature within twelve months (2017 – four months).

16. CASH AND CASH EQUIVALENTS:

For the purpose of the cash flow statement, cash and cash equivalents comprise short term deposits, cash at bank and cash in hand as follows:

2018 2017 $’000 $’000 Short term deposits 327,511 346,976 Cash at bank 52,995 75,994 Cash in hand 170 151 380,676 423,121

The weighted average interest rate on short term deposits denominated in Jamaican dollars and United States dollars was 3.53% and 1.35%, respectively (2017 - 5.81% and 1.75%, respectively) and these deposits mature within three months (2017 – three months). There are no non-cash transactions included in the statement of cash flows.



31 MARCH 2018


The in-service specimen rates (number of occurrences per 1,000 members) are as follows: Males Females __________________________________________________________________________________ Withdrawals Ill-health Deaths in Withdrawals Ill-health Deaths in Age from service retirements service from service retirements service 20 - - 0.320 - - 0.193 25 - - 0.519 - - 0.207 30 - - 0.710 - - 0.276 35 - - 0.755 - - 0.367 40 - - 0.884 - - 0.493 45 - - 1.153 - - 0.661 50 - - 1.668 - - 0.946 55 - - 2.792 - - 1.892 60 - - 5.416 - - 3.936 The five-year trend for the fair value of plan assets, the defined benefit obligation, the surplus

in the plan and the five-year experience adjustments for plan assets and liabilities is as follows:

2018 2017 2016 2015 2014 $’000 $’000 $’000 $’000 $’000 Fair value of plan assets 281,389 290,665 264,047 240,824 206,454 Defined benefit obligation (250,593) (206,441) (189,735) (166,514) (142,556)

Surplus 30,796 84,224 74,312 74,310 63,898

Experience adjustments: Gain/(loss) -

Arising on plan assets ( 16,999) ( 9,780) ( 9,788) ( 6,099) ( 8,913) Arising on plan liabilities 7,594 8,994 1,897 3,434 1,792

12. LONG TERM RECEIVABLE:

This represents outstanding regulatory fees for the period 2007 – 2010 from the Jamaica Urban Transit Company Limited (JUTC).

On 29 September 2015 the organization was awarded a successful judgement by the Supreme Court in the amount of $16,000,000. As at 31 March 2018, JUTC owed $8,699,000 (2017 - $10,000,000). An agreement between the organization and JUTC was signed on 7 June 2017 where the amount due is repayable over thirty-six (36) months and attracts interest at 5% per annum.

The current portion of $3,790,000 (2017 - $ 1,829,000) is included in receivables.



Page 34



31 MARCH 2018 17. ADVANCES FROM THE GOVERNMENT OF JAMAICA: 2018 2017 $’000 $’000 At 31 March 64,367 64,367 Less current portion (51,810) - . 12,557 64,367

The amounts represent advances from the Government of Jamaica. The advances were to fund the start-up costs of the Office of Utilities Regulation. There is an agreement between the organization and the Government of Jamaica dated 28 April 2018 outlining the repayment of the advances (note 23).

18. PAYABLES: 2018 2017 $’000 $’000 Refundable bonds 408 408 Accrued vacation pay 35,141 32,022 Gratuity payable 29,085 35,539 Accounts payable 29,117 12,635 Other accruals 58,249 42,420 152,000 123,024 19. DEFERRED INCOME: 2018 2017 $’000 $’000 At 1 April 137,450 113,850 Project income deferred 34,374 23,600 Transferred to revenue ( 15,588) - . At 31 March 156,236 137,450 20. RELATED PARTY TRANSACTIONS AND BALANCES:

(a) Transactions between the organization and its related parties

Regulatory fees - During the year, the organization billed regulatory fees of $127,397,000 and $312,217,000 (2017 - $111,112,000 and $302,573,000) to the National Water Commission and the Jamaican Public Service Company Limited, respectively.



31 MARCH 2018

20. RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D):

(b) Key management compensation 2018 2017 $’000 $’000

Salaries and other short term employee benefits 121,960 114,267 Payroll taxes – Employer’s portion 6,099 4,956 Pension 1,311 2,321 129,370 121,544 Office members’ emoluments - Fees 9,350 11,750. Management remuneration (included above) 22,395 22,876 31,745 34,626

(c) Year-end balances arising from transactions with related parties 2018 2017 $’000 $’000

Due from – National Water Commission 53,226 40,560 Jamaica Public Service Company Limited 26,018 - Jamaica Urban Transit Company Limited – Long term 4,909 8,171

- Short term 3,790 1,829 87,943 50,560

21. LEASE COMMITMENTS: Future lease payments under operating leases at 31 March 2018 were as follows: Minimum Lease Present Value of Payments Minimum Lease Payments 2018 2017 2018 2017 $’000 $’000 $’000 $’000 No later than one year 24,122 24,122 20,102 20,102 Later than one year 30,153 54,276 20,753 34,045 54,275 78,398 40,855 54,147





31 MARCH 2018

22. LITIGATIONS (CONT’D):

(c) Supreme Court Civil Appeal No. 122 of 2012 & Claim No. 2011 HCV 05614

Dennis Meadows, Betty Ann Blaine & Cyrus Rousseau v the Attorney General of Jamaica, Jamaica Public Service Company Limited & Office of Utilities Regulation

The claimants filed suit against the Attorney General of Jamaica (AG), Jamaica Public Service Company Limited (JPS) and the OUR challenging the legality of the JPS’s All-Island Electric Licence, 2001 (Licence). The claimants argued that the exclusivity of the Licence granted to JPS is void, as it is outside the scope of section 3 of the Electric Lighting Act and/or it is an unlawful fetter of the Minister's discretion. The claimants also contended that the OUR acted unlawfully in making a recommendation for the grant of the licence. In the Supreme Court, judgment was granted in part, in favour of the claimants declaring that the Licence was valid but the condition upon which it was granted, that is exclusively, was not. Judgment was also granted in favour of the OUR. The Supreme Court judgment was appealed by JPS and counter-appealed by the claimants. The Court of Appeal, reversed the Supreme Court ruling against JPS and the AG, upheld the ruling relative to the OUR and refused to overturn the award of costs to the OUR. On the hearing of an application for leave to appeal to the Privy Council filed by the claimants, the Court of Appeal with respect to the OUR refused leave and in relation to JPS and the AG, granted leave to appeal accordingly.

The OUR has pursued the recovery of its costs awarded in the Supreme Court and is awaiting the signed Amended Default Costs Certificate in the sum of $3,838,162.95. In relation to the costs awarded in the Court of Appeal, the OUR obtained a Default Costs Certificate in the sum of $5,032,800.00 which was served on the Respondents' Attorney in November 2015.

Status after 31 March 2018:

The OUR’s attorneys continue to follow up with the Supreme Court Registrar for the Amended Default Costs Certificate. The OUR will take the steps necessary to recover all the costs awarded to it.



31 MARCH 2018

22. LITIGATIONS: The following is the legal report from the organization’s attorneys.

(a) RIO-5

Cable & Wireless Jamaica Limited appealed to the Telecommunications Appeal Tribunal against the decision of the OUR dated 19 March 2007 in respect of the Reconsideration Decision on Assessment of RIO 5 and Tariff Schedule RIO-5A ("Indirect Access"). The appeal which was listed for hearing on 27 May 2013 was adjourned to facilitate the parties trying to resolve the matter on their own.


No change in status. The OUR intends to ascertain from Cable & Wireless Jamaica Limited whether it will withdraw the appeal or seek to have it relisted for hearing.

(b) Claim No. 2011 HCV 01117

The Office of Utilities Regulation v Jamaica Urban Transit Company Limited

The OUR filed suit against the Jamaica Urban Transit Company Limited (JUTC) to recover the sum of Twenty-Two Million, Four Hundred and Sixty-Nine Thousand One Hundred and Thirty Dollars ($22,469,130.00) being monies due and owing for outstanding regulatory fees. On 28 September 2015 judgment was entered in the Supreme Court in favour of the OUR in the sum of Sixteen Million Dollars ($16,000,000.00) inclusive of interest and costs. JUTC made payments towards settling the judgment debt in the sum of Six Million Dollars ($6,000,000.00). The OUR requested a status report on payments from JUTC.

On 15 June 2017, the OUR received confirmation of an agreement reached between the OUR and JUTC for the repayment of the outstanding balance of $10M. Pursuant to the agreement, JUTC is to settle the outstanding $10M judgment debt by way of monthly instalments paid over thirty-six (36) months at an interest rate amortized over the said period with payments commencing September 2017. On 13 March 2018, the OUR received the 5th instalment on the payment of the judgment debt in the amount of $299,709.00. JUTC was behind on payments of instalments for February and March 2018.


On 25 April 2018, the OUR received the 6th instalment on the payment of the judgment debt in the amount of $299,709.00. JUTC was behind on payments of instalments for March and April 2018.





31 MARCH 2018


(d) Claim No. 2014 HCV 02345

OUR v Computers & More Limited

The OUR filed a claim against Computers & More Limited (Defendant) for the recovery of the sum of One Million Six Hundred and Fourteen Thousand Dollars ($1,614,000.00) together with the interest for breach of contract, whereby the Defendant agreed to supply twenty (20) Microsoft Surface Pro Tablets and twenty (20) Targus USB 2.0 Docking Stations with Video. A Defence and Counterclaim was filed by Computers & More Limited in which it contends that the Claimant was aware that although the agreement stated that the goods would be delivered within fifteen (15) days of receipt of the purchase order, it would not be delivered as the Surface Pro Tablet was not available in the USA at the time the agreement was signed, and when released; it was only available in limited numbers and therefore it suggested that another similar product be sourced instead and costs were incurred in the attempts to source the product.

The OUR filed a notice of application for summary judgment and to have the defence/statement of case struck out in July 2016. The Case Management Conference and the hearing of the said application which was scheduled to be heard at the Case Management Conference on 7 October 2016 was rescheduled to 17 May 2017. On 17 May 2017, the Supreme Court struck out the Defendant’s defence and entered judgment in favour of the OUR in the sum of $1,614,000 together with interest at 10% per annum from 15 May 2014 to 17 May 2017. Also, summary judgment was entered in favour of the OUR in respect of the Defendant’s counterclaim and costs on the Claim and Counterclaim. The Defendant, on 26 May 2017, appealed the judge’s decision to the Court of Appeal.


We await a date from the Court of Appeal for the Case Management Conference.

(e) Claim No. 2014 HCV 02915

Office of Utilities Regulation v The Contractor General

The OUR on 17 June 2014 applied in the Supreme Court for leave to apply for Judicial Review of the decision of the Contractor General contained in Report of Special Investigation - Right to Supply 360 Megawatts of Power to the National Grid Office of Utilities Regulation, Ministry of Science, Technology, Energy and Mining laid in Parliament on 16 September 2013 which the OUR deemed invalid, unlawful and without legal effect. The matter was heard and the Judge refused to grant the OUR leave to apply for judicial review in respect of the relief of certiorari and indicated that no leave was required in respect of the application for the declarations. The OUR, on 4 May 2016 filed a Fixed Date Claim Form applying for the declarations.



31 MARCH 2018


(e) Claim No. 2014 HCV 02915 (cont’d)

Office of Utilities Regulation v The Contractor General (cont’d)

The matter was scheduled for hearing 3–6 and 9–11 October 2017. The Pre-Trial Review was scheduled for 29 May 2017. At the Pre-Trial Review held on the 29 May 2017, the scheduled trial dates were vacated and a new trial date for hearing was set for the week commencing 30 April 2018. Status after 31 March 2018:

Following discussions between the Director-General and the Contractor-General, it was agreed that the OUR would discontinue the court action. A joint statement explaining this development was issued on or about 24 April 2018 and a Notice of Discontinuance signed on behalf of both parties was filed in the Supreme Court on 25 April 2018, thus ending the suit. Both parties bore their own costs. A bill for legal fees from Livingston, Alexander & Levy in the amount of $1,452,755.00 was submitted on 23 April 2018 which was paid.

(f) Privy Council Appeal No. 0002 of 2016

Jamaica Public Service Company Limited v The All-Island Electricity Appeal Tribunal, Paul Harrison, Derrick McKoy, Derek Jones and the Office of Utilities Regulation

As part of its 2009 Rate Review, JPS submitted a claim to the OUR to recover $3.5 billion dollars paid in retroactive salaries and statutory payments to its workers in a reclassification exercise, plus opportunity cost of $722 million, under the Z-Factor provision of the All-Island Electric Licence, 2001. The OUR denied the claim and JPS appealed the decision to the All-Island Electricity Appeal Tribunal (EAT).

The EAT dismissed JPS’ appeal and confirmed the decision of the OUR. JPS sought and was granted leave to apply for judicial review of the EAT’s decision in the Supreme Court. The OUR sought and was granted permission to be added as an interested party in the matter. In March 2013, the Supreme Court dismissed JPS’ application indicating that there was no evidence presented by JPS that the EAT had acted irrationally, illegally or incorrectly in coming to its decision.





31 MARCH 2018


(g) All-Island Electricity Appeal Tribunal: Appeal No.1 of 2015 (cont’d)

Appeal against Jamaica Public Service Company Limited Tariff Review for the Period 2014 - 2019 Determination Notice Jamaica Public Service Company Limited v Office of Utilities Regulation (cont’d)

In March 2017 the OUR requested JPS to indicate the grounds of appeal it intends to pursue. By letter dated 6 April 2017 JPS indicated that it is minded to withdraw certain grounds of appeal. However, there are some remaining grounds to be litigated. By letter dated 24 August 2017, JPS confirmed the withdrawal of certain grounds and its intention to proceed with the remaining grounds. Subsequently, by letter dated 8 November 2017, JPS indicated a willingness to withdraw both appeals provided there is satisfactory agreement on three matters. On 2 March 2018, JPS submitted a detailed settlement proposal regarding the three matters on which it sought agreement.

Due to the expiration of the term of the members of the Tribunal in September 2017 (the Tribunal has since been reconstituted), and in light of JPS’ proposal, no date for hearing was set and no steps has been taken by JPS to have the matter relisted for hearing.

In the OUR’s opinion, the continuation of the appeal may be of academic value only. In any event, the OUR's actions were consistent with governing legislation and licence at the time. Notwithstanding, in March 2017 the OUR requested JPS to indicate the grounds of appeal it intends to pursue.


The OUR is in the process of examining the detailed settlement proposal.

(h) All-Island Electricity Appeal Tribunal: Appeal No.2 of 2015

Appeal against Directive to Jamaica Public Service Company Limited for the repayment of foreign exchange adjustment charges on fuel supplied by Petrojam Limited during the period March 2013 to December 2013 dated 13 February 2015

In a Directive issued to the Jamaica Public Service Company Limited (JPS), the OUR directed JPS to refund its customers approximately J$973 Million that it unilaterally imposed as foreign exchange adjustments on fuel supplied by Petrojam Limited to JPS between March 2013 and December 2013. The OUR stated that JPS' action was in contravention of Exhibit 2, Schedule 3 of the Amended and Restated All-Island Electric Licence, 2011, and the customers were to be fully refunded within six (6) months of the effective date of the Directive. JPS appealed the provisions of the Directive to the All-Island Electricity Appeal Tribunal.

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31 MARCH 2018


(f) Privy Council Appeal No. 0002 of 2016 (cont’d)

Jamaica Public Service Company Limited v The All-Island Electricity Appeal Tribunal, Paul Harrison, Derrick McKoy, Derek Jones and the Office of Utilities Regulation (cont’d) JPS appealed the decision of the Supreme Court to the Court of Appeal. In March 2015, the Court of Appeal dismissed JPS’ appeal and awarded costs to the OUR and the other respondents. In November 2015, JPS was granted leave to appeal to the Judicial Committee of the Privy Council and filed its appeal therewith on 6 January 2016. The matter was heard at the Privy Council on 7 June 2017 and judgment delivered on 6 July 2017. The Privy Council dismissed JPS’ appeal and awarded the OUR and the EAT the costs of litigating the matter in the Privy Council. JPS agreed the OUR’s Privy Council costs in the amount of £52,105.00 and payment was received by the OUR on or about 9 March 2018. On 6 October 2017, the OUR instructed John G. Graham & Company to pursue the Court of Appeal costs awarded to it. By letter dated 10 October 2017, JPS’ attorneys indicated a willingness to negotiate a settlement of the OUR’s Court of Appeal costs.


The costing information has been submitted to our attorneys to facilitate negotiations with JPS’ attorneys regarding the settlement of the costs. By letter dated 31 May 2018, OUR’s attorneys proposed a settlement in the amount of $3M. The OUR awaits the outcome of the negotiations regarding same.

(g) All-Island Electricity Appeal Tribunal: Appeal No.1 of 2015

Appeal against Jamaica Public Service Company Limited Tariff Review for the Period 2014 - 2019 Determination Notice Jamaica Public Service Company Limited v Office of Utilities Regulation

The Jamaica Public Service Company Limited (JPS) appealed to the All-Island Electricity Appeal Tribunal regarding certain determinations of the OUR set out in the “Jamaica Public Service Company Limited Tariff Review for Period 2014-2019 Determination Notice” dated 7 January 2015.

The matter was scheduled for hearing on 14 March 2016, but based on the provisions of the Electricity Licence, 2016 effective 27 January 2016, which fundamentally changed the tariff regime, as well as the amendments to the Office of Utilities Regulation Act, the hearing of the matter was adjourned to 3-14 October 2016. The matter was further adjourned for hearing for a date to be agreed in September 2017.





31 MARCH 2018


(h) All-Island Electricity Appeal Tribunal: Appeal No.2 of 2015 (cont’d)

Appeal against Directive to Jamaica Public Service Company Limited for the repayment of foreign exchange adjustment charges on fuel supplied by Petrojam Limited during the period March 2013 to December 2013 dated 13 February 2015 (cont’d)

The appeal is to be heard at the same time as Appeal No. 1 of 2015 mentioned immediately above. However, for the reasons outlined above, the hearing of the Appeals did not take place. By letter dated 8 November 2017, JPS indicated a willingness to withdraw both appeals provided there is satisfactory agreement on three matters. On 2 March 2018, JPS submitted a detailed settlement proposal regarding three matters on which it sought agreement.

Our opinion on the results of the appeal is the same as stated above.


The OUR is in the process of examining the detailed settlement proposal.

(i) Telecommunications Appeals Tribunal: Appeal by Cable & Wireless Jamaica Limited

under section 60 (4) of the Telecommunications Act against the Determination of the OUR dated 8 September 2017 in respect of the Reconsideration Decision on the “Cost Model for Fixed Termination Rates – The Decision on Rates” Determination Model (i.e. the glide path to be implemented in respect of the new rates)

By Determination Notice dated 7 June 2017 – “Cost Model for Fixed Termination Rates – The Decision on Rates” the OUR determined the new rates to be charged for fixed termination services, and prescribed a two tiered implementation of the rates with the first step down scheduled for 1 July 2017, and the second step down scheduled for 1 January 2018.

On 21 June 2017 Cable & Wireless Jamaica Limited (C&WJ) sought a reconsideration of the decision pursuant to section 60(4) of the Telecommunications Act and the OUR agreed to stay its decision until it issued its decision. After a review of the reconsideration request and consultation with the industry, the OUR issued its final decision on 8 September 2017 – “Reconsideration of the Office’s Decision: Determination Notice … “Cost Model for Fixed Termination Rates – The Decision on Rates…” confirming its previous determination except that the first step down in the glide path was fixed for 1 October 2017 and the second step down, 1 April 2018.



31 MARCH 2018


(i) Telecommunications Appeals Tribunal: Appeal by Cable & Wireless Jamaica Limited under section 60 (4) of the Telecommunications Act against the Determination of the OUR dated 8 September 2017 in respect of the Reconsideration Decision on the “Cost Model for Fixed Termination Rates – The Decision on Rates” Determination Model (i.e. the glide path to be implemented in respect of the new rates) (cont’d)

On 19 September 2017 C&WJ filed an appeal of the reconsideration decision with the Telecommunications Appeal Tribunal (Tribunal). In the absence of a constituted Tribunal, on 28 September 2017, C&WJ filed a Notice of Application for court orders in the Supreme Court seeking leave to apply for judicial review of the OUR’s reconsideration decision and an injunction to stay the decision pending judicial review of the matter.

(j) Claim No. HCV 03122 of 2017

Cable & Wireless Jamaica Limited v Office of Utilities Regulation

C&WJ’s application for leave to apply for judicial review and an interim injunction in connection with the OUR’s Reconsideration Decision was denied by Justice Kirk Anderson on 31 October 2017. The denial was on the basis that C&WJ has an alternative remedy to judicial review to address its concerns with the OUR’s decision i.e. via an appeal to the Telecommunications Appeal Tribunal. C&WJ’s application for leave to appeal the Judge’s decision was also denied. The Tribunal was constituted and appointments became effective on 3 October 2017. Consequently, C&WJ relisted the matter before the Tribunal.

Telecommunications Appeals Tribunal: CONTINUATION

The Tribunal heard the matter on 26 February 2018 and delivered its judgment on 8 March 2018. The Tribunal dismissed the appeal and upheld the OUR’s decision regarding the implementation of new fixed termination rates.


Not Applicable





31 MARCH 2018

23. SUBSEQUENT EVENT: Government of Jamaica Advance Agreement

On 28 April 2018, an agreement was signed with the Government of Jamaica (GOJ) which stipulates that an amount of $39,253,000, which represents monies recoverable by the organization for withholding tax on investment income, would be used to set off against the advances from the GOJ.

The remaining balance of $25,113,000 should be repaid in two equal annual installments over a period of 2 years, beginning 30 April 2018, until maturity on 30 April 2019. No interest is payable on these amounts, except in the event of a default where interest of 5% per annum shall become payable on such arrears of the installment.



31 MARCH 2018


(k) Access to Information Tribunal – AT/OUR/2017/1

Nadine Newell v Office of Utilities Regulation

On 4 August 2017, Nadine Newell requested a copy “…of the OUR’s Investigation Report, inclusive of any and all side letters or supplemental documents relating to Cable & Wireless Jamaica Limited’s/ Flow’s publication of the names, telephone numbers, and addresses of private unlisted customers in the residential 2017 directory”. While there was no investigation report, the OUR shared all official documents in its possession related the matter which included letter correspondences between the OUR and Cable & Wireless Jamaica Limited (C&WJ).

Portions of one of the letters from C&WJ dated 27 January 2017, which comprised information submitted in confidence by the company, was redacted from the copy shared with Mrs. Newell.

In October 2017, Mrs. Newell sought an internal review of the OUR’s decision to redact portions of the information. The Director-General in his response modified the original decision by allowing some but not all of the redacted information to be shared with Mrs. Newell.

On 28 December 2017, the OUR was served with a Notice of Appeal indicating that Mrs. Newell has appealed to the Access to Information Appeal Tribunal regarding the OUR’s decision to refuse disclosure of portions of the letter dated 27 January 2017 from C&WJ to the OUR. The Tribunal heard the matter on 29 March 2018.

Status after 31 March 2018: The ATI Tribunal delivered its ruling on 3 May 2018 and allowed the appeal against the OUR. The letter, the subject of the appeal, including the redacted information, was sent to the Appellant’s attorneys by the OUR’s external counsel, in compliance with the Tribunal’s decision.

On 11 April 2018, a bill for legal fees from Livingston, Alexander & Levy dated 11 April 2018 in the amount of $1,308,295.00 was submitted, which was paid.





31 MARCH 2018

24. RESTATEMENT OF PRIOR YEAR BALANCES:

Restatement of prior year balances relate to recognition of deferred income arising from a change in accounting policy whereby funds received for specified projects will be accounted for in the period in which the related expenses are incurred. Effects on the organization’s statement of financial position at 31 March 2016

As previously Effect of Reported Restatement As Restated $’000 $’000 $’000

ASSETS NON-CURRENT ASSETS: Property, plant and equipment 34,957 - 34,957 Post employment benefit assets 74,312 - 74,312

109,269 - 109,269 CURRENT ASSETS: Receivables 127,437 - 127,437 Taxation recoverable 29,958 - 29,958 Short term investments 19,155 - 19,155 Cash and cash equivalents 504,814 - 504,814

681,364 - 681,364 790,633 - 790,633

RESERVES AND LIABILITIES RESERVES: Retirement benefit reserve 74,312 - 74,312 Retained earnings 479,844 (113,850) 365,994

554,156 (113,850) 440,306

NON-CURRENT LIABILITY: Advances from the Government of Jamaica 64,367 - 64,367

CURRENT LIABILITIES: Payables 172,110 - 172,110

Deferred income - . 113,850 113,850 172,110. 113,850 285,960 790,633 - 790,633



31 MARCH 2018

24. RESTATEMENT OF PRIOR YEAR BALANCES (CONT’D): Effects on the organization’s statement of financial position at 31 March 2017 As previously Effect of Reported Restatement As Restated $’000 $’000 $’000

ASSETS NON-CURRENT ASSETS: Property, plant and equipment 50,046 - 50,046 Post employment benefit assets 84,224 - 84,224

Long term receivable 8,171 - . 8,171

142,441 - 142,441 CURRENT ASSETS: Receivables 91,989 - 91,989 Taxation recoverable 34,537 - 34,537 Short term investments 65,617 - 65,617 Cash and cash equivalents 423,121 - 423,121

615,264 - 615,264 757,705 - 757,705

RESERVES AND LIABILITIES RESERVES: Retirement benefit reserve 84,224 - 84,224 Retained earnings 486,090 (137,450) 348,640

570,314 (137,450) 432,864

NON-CURRENT LIABILITY: Advances from the Government of Jamaica 64,367 - 64,367

CURRENT LIABILITIES: Payables 123,024 - 123,024

Deferred income - . 137,450 137,450 123,024 137,450 260,474 757,705 - 757,705





31 MARCH 2018

24. RESTATEMENT OF PRIOR YEAR BALANCES (CONT’D):

Effects on the statement of cash flows year ended 31 March 2017 As previously Effect of

Reported Restatement As Restated $’000 $’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES: Net surplus/(defecit) 18,955 (23,600) ( 4,645) Items not affecting cash resources: Depreciation 17,377 - 17,377 Retirement benefit expense 3,213 - 3,213 Interest income ( 18,254) - ( 18,254) Exchange gain on foreign balances ( 1,933) - ( 1,933) Deferred income - 23,600 23,600 Movement in bad debt provision ( 13,100) - ( 13,100) Gain on disposal of property, plant and equipment ( 4,135) - . ( 4,135)

2,123 - 2,123

Changes in operating assets and liabilities: Receivables 40,134 - 40,134 Payables ( 49,086) - ( 49,086) Taxation recoverable ( 4,579) - ( 4,579) Retirement benefit contributions paid ( 15,922) - ( 15,922)

Cash used in operating activities ( 27,330) - ( 27,330)

CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 18,497 - 18,497 Proceeds from disposal of property, plant and equipment 4,135 - 4,135 Purchase of property, plant and equipment ( 32,466) - ( 32,466) Short term investments ( 46,462) - ( 46,462)

Cash used in investing activities ( 56,296) - ( 56,296)

DECREASE IN CASH AND CASH EQUIVALENTS ( 83,626) - ( 83,626)

Exchange gain on foreign cash balances 1,933 - 1,933

Cash and cash equivalents at beginning of year 504,814 - 504,814

CASH AND CASH EQUIVALENTS AT END OF YEAR (note 16) 423,121 - 423,121



31 MARCH 2018

24. RESTATEMENT OF PRIOR YEAR BALANCES (CONT’D):

Effects on the statement of comprehensive income year ended 31 March 2017 As previously Effect of

Reported Restatement As Restated $’000 $’000 $’000

REVENUE 740,654 (23,600) 717,054

Other operating income 6,068 - . 6,068 746,722 (23,600) 723,122

Administrative and other expenses (746,021) - . (746,021) 701 (23,600) ( 22,899)

Interest income 18,254 - . 18,254

NET SURPLUS/(DEFICIT) 18,955 (23,600) ( 4,645)

OTHER COMPREHENSIVE INCOME:

Items that will not be reclassified to statement of income –

Remeasurement gain/(loss) of the defined benefit liability 6,983 - 6,983

Remeasurement loss of the plan assets ( 9,780) - . (( 9,780) ( 2,797) - ( 2,797)

TOTAL COMPREHENSIVE INCOME 16,158 (23,600) ( 7,442)

NOTES

116OFFICE OF UTILITIES REGULATION ANNUAL REPORT 2017-2018ANNUAL REPORT 2017-2018OFFICE OF UTILITIES REGULATION

3rd Floor PCJ Resource Centre, 36 Trafalgar Rd., Kingston 10

Tel: 876-968-6053 | Toll Free: 888-CALL-OUR (225-5687) | Fax: 876-929-3635

Email: [email protected] | Website: www.our.org.jm


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