Regulator ran nearly $1.5M operating deficit
The Utility Regulation and Competition Office, known as OfReg, spent $234,233 on travel-related activities last year, according to the utilities and commodities regulator’s 2017 annual report.
The expenses were nearly twice the $118,027 OfReg budgeted for travel in 2017, and contributed to the office’s nearly $1.5 million operating deficit for the year.
The report states that OfReg’s telecommunications office spent about $113,000 on travel, its electricity office spent $46,554, its fuel office spent $51,385, and its water office spent $22,838.
The annual report does not itemize OfReg’s travel expenses, but states that its “directors traveled more than planned, representing OfReg at conferences.”
OfReg also spent $177,368 more than it budgeted on consultancy and professional fees, $36,877 more than budgeted on legal fees, and $49,997 more than budgeted on “other operating expenses,” the report states.
In addition, the regulator experienced a roughly $2 million shortfall in “revenue from trading with any other person,” the report states. OfReg was projected to take in nearly $4.3 million from such revenue, but only collected about $2.3 million, according to the report.
In May, OfReg had to ask central government for a $1 million cash injection to address its budget shortfall.
At the time, OfReg Vice President Alee Fa’amoe told legislators that when OfReg was created last year, it was assumed at the time that OfReg’s budget would include funding provided via the territory’s water and fuel regulators. But that has not been sorted out, Mr. Fa’amoe said at a Public Accounts Committee meeting in May.
OfReg’s annual report makes similar statements.
“The fact is that insufficient consideration was given to the additional burden to [OfReg] imposed by the inclusion of the fuels market and the water sector regulatory functions,” the report states.
OfReg’s budget shortfall has led to, among other things, a delay in plans to resolve problems with how emergency calls are routed to the 911 Emergency Communications Centre.
Previously, 911 calls have been 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 Information and Communications Technology Authority 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 at the May Public Accounts Committee meeting that 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,” Mr. Fa’amoe said, referring to the situation now occurring with OfReg’s finances. He said 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 OfReg.
“There was no other way to fund the costs of that entity,” he said.