Cayman’s recently formed utilities and commodities regulator, OfReg, has asked for a $1 million cash injection from government to make up a funding shortfall that the agency says was not addressed when the British Overseas Territory combined its various regulatory agencies last year.
The shortfall led to, among other things, a delay in plans to resolve problems with how emergency calls are routed to the 911 Emergency Communications Centre, the Legislative Assembly’s Public Accounts Committee heard Wednesday.
OfReg Vice President Alee Fa’amoe told committee members that money left in cash reserves held by the former Information and Communications Technology Authority following the merger of regulatory agencies had to be spent to fund operations during the last government budget.
In 2017, legislators approved the merger of the ICTA, as well as the Water Authority – Cayman, the former Electricity Regulatory Authority and some functions of the former Petroleum Inspectorate under one entity – now known as OfReg.
Mr. Fa’amoe said it was assumed at the time that OfReg’s budget would include funding provided via the territory’s water and fuel regulators, but he said that has not been sorted out. OfReg ended the 2016/17 budget year in deficit, Mr. Fa’amoe said.
At the start of this year’s budget, Mr. Fa’amoe said he and the agency’s president, J. Paul Morgan, went through the OfReg budget and found it had just 90 days of cash left.
Accountant General Matthew Tibbetts said a paper requesting the additional $1 million was presented to Cabinet Tuesday, which he said should cover OfReg’s losses for the previous budget year.
Mr. Fa’amoe said the issue was discussed in government’s political caucus, and a number of solutions were discussed to address the funding issues going forward during 2018 and 2019.
Public Accounts Committee Chairman Ezzard Miller was incredulous. “This OfReg legislation is nearly two years old and here we are now trying to sort out where the funds go?”
“The budget we put forward at the time assumed the funding mechanisms for fuel and water [agencies] would be sorted out, and they were not,” Mr. Fa’amoe said.
Government backbencher Barbara Conolly, an accounts committee member, asked what happened to the funds for the 911 project.
Mr. Fa’amoe responded that part of the funds earmarked for the 911 system fix were taken from the former ICTA reserve fund, which was largely consumed in the operating costs of the new entity that was formed, OfReg, as the “one-stop-shop” regulator for telecommunications, electricity, petroleum and water.
“There was no other way to fund the costs of that entity,” Mr. Fa’amoe said.
Mr. Fa’amoe suggested that one solution would be for government to allow OfReg access to an additional $1.4 million it collected in royalties from telecommunications licenses. “Unfortunately, that didn’t happen either. We’ve essentially brought that proposal directly to Cabinet,” he told the committee.
Later Wednesday, Mr. Miller said he wished to record “how disappointed I am” that “after all the fanfare and pages and pages of legislation,” that OfReg wasn’t funded properly, at least initially, to perform its functions.
“Some Cabinet decisions have been taken which will now fix that, but we were disappointed that the funding didn’t happen as rapidly as it could have,” Mr. Morgan, OfReg’s president, said in response to Mr. Miller.
The 911 problem
The issue discussed Wednesday by lawmakers has been a troubling one for Cayman in recent years and involves how calls are routed to the 911 center.
Previously, those calls had to be routed through a third-party service provider and, as has happened in the past, if the service was down, calls could not get through to 911. Former Governor Helen Kilpatrick agreed to green-light a change made by the former ICTA that obliged the telecommunications companies to connect directly to 911 and use, as a backup, other telecommunications providers in case their systems failed.
Mr. Fa’amoe said regulators found, in their investigation of the issue, that the 911 center’s equipment was “obsolete” and that there was no budget to replace it.
The former ICTA requested proposals for the 911 upgrade and even went to a vendor selection process. “But unfortunately, those funds are no longer there,” he said, referring to the situation now occurring with OfReg’s finances.