EDITORIAL – OfReg: A regulator in need of a regulator?

OfReg, Cayman’s avaricious and metastasizing regulator, is making far too many headlines in this newspaper, and the headlines are not flattering. Since it opened for business in January 2017, its performance has been anything but stellar. In fact, it has been extremely troubling.

Consider just a few highlights (lowlights) from its recently released annual report:

OfReg spent more than CI$1 million last year in consultancy and professional fees.

Nearly an additional quarter million dollars (CI$234,000) was spent on travel-related expenses.

Another quarter million (CI$243,752 to be precise) went to legal fees.

A further CI$304,630 went into a non-descriptive category that makes accountants cringe: “other operating expenses.”

In total last year, OfReg (which stands for the Utility Regulation and Competition Office) spent CI$2.2 million on salaries and benefits for 22 employees – approximately CI$100,000 per employee.

Despite that expenditure, the additional CI$1 million in consultancy fees was required, according to the report, because the 22 employees, while “enthusiastic, wiling and dedicated,” lack “the range of requisite skills to perform its regulatory work.”

Whoa. What? But there’s more:

The Compass has reported in the past year that OfReg was flirting with the idea of requiring licensing for retailers that offer wireless internet “hot spots” for customers. We believe this fanciful idea has died a merciful death.

We also reported, and editorially strongly opposed, OfReg’s proposal that government assume responsibility for installing fiber optic networks in the Eastern districts – and sending telecom companies the bill.

Similarly, we also took issue editorially with OfReg’s leadership for telling lawmakers they considered it “futile” to attempt to enforce a licensing requirement for cable companies to provide local content over a “free-to-air” public channel. OfReg was quoted as saying it was “not worth starting a war” to attempt to collect fees legally owed by government broadcasters.

Late last month, OfReg announced it would solicit a comprehensive review to identify contributors to rising fuel prices with an eye toward the establishment of “effective supervision” of that market. Although we were relieved to hear Chief Executive Officer J. Paul Morgan assure Public Accounts Committee members he was inclined to sort the problem by increasing competition in that sector, his assurance did little to diminish our continuing and overarching concerns.

For example, in OfReg’s annual report, Mr. Morgan writes, “It was assumed at the policy level that the revenues from the ICTA, the ERA [predecessor regulators] and the core government appropriations would be sufficient to fund the transition and perhaps future operations of the Office.

“The fact is that insufficient consideration was given to the additional burden to the Office imposed by the inclusion of the fuels market and the water sector regulatory functions.”

Especially troubling, leadership has been less than forthcoming with sharing relevant information with the general public. When the Compass sought comment on recent articles concerning the aforementioned annual report, Mr. Morgan demurred, writing to say he was off island on personal business. He referred the reporter to Deputy CEO Alee Fa’amoe, who did not respond to Mr. Morgan’s or the reporter’s follow-up request.

The Compass has now learned from the most reliable of sources that Mr. Morgan is, in fact, departing his post as CEO. To our knowledge, OfReg has made no such announcement publicly.

Why not, and what on Earth is going on at that agency?

1 COMMENT

  1. I believe that Mr. Morgan, and Mr. Alee Fa’amoe both should be hauled up to the PAC to answer about and what all that money and travel was spent on and for . I have to be honest and say I think that OFReg should be desolved , because I believe that it is protecting the private sector more than it’s protecting the consumers /public , and according to the money they spend on travel they will have the Islands bankrupt in a short time.

  2. OfReg is staffed by friends and cronies of the Premier not a team with a mission to improve anything. Should our electric rates be higher or lower? Should our broadband be faster or available in more locations? What should the price of fuel be? Is our water safe to drink?

    Let’s face it this is a program to create jobs for 22 people.