The Utility Regulation and Competition Office, known as OfReg, budgeted roughly $5.6 million in operating expenses for 2018, which is some $1 million more than the regulator spent last year.
Despite running a nearly $1.5 million operating deficit in 2017, OfReg’s 2018 budget shows increases in staff payroll, directors’ fees, training and other operating expenses. The expenditures will be paid for in part by revenue increases from the fuels sector, according to OfReg.
The budget projected a reduction in travel-related expenses to $116,600 in 2018 “due to reduced budgeting for staff travel for international meetings, conferences and workshops versus 2017.” But this has not been the case, as records obtained by the Cayman Compass show that OfReg has already spent $132,895 on travel-related expenses from Jan. 1 through the end of May this year. The regulator has spent at least $387,645 on travel-related expenses since it was created in January 2017.
In terms of revenue, OfReg projected sizeable revenue increases for this year, with income jumping from $2.9 million in 2017 to $5.4 million in 2018.
That projected increase largely came from expectations that revenue from the water and fuels sectors would increase by about $1 million each, according to the budget figures, which are in OfReg’s 2018 annual plan.
According to OfReg, it was assumed at the time that its budget would include funding provided via the territory’s water and fuel licensees. But that was not sorted out for 2017, contributing to OfReg’s operating deficit. OfReg told the Compass on Monday that funding from the fuels sector is now in place, and arrangements for revenue from the water sector are still being discussed with Cabinet.
OfReg has also planned to increase its revenue by implementing a number of fee increases across the sectors it regulates, including the removal of the $600,000 cap charged to telecommunications companies based on their revenues, and the introduction of a “registration fee” regime in the fuels sector. OfReg said on Monday that the changes to the fee structures are “in development.”
By the end of the year, OfReg plans to be self-sufficient and will not require revenue from central government, according to a press release sent to the Compass on Monday from OfReg’s public relations firm Fountainhead.
“It is common practice for Government to provide initial funding to get regulatory bodies organised and functioning efficiently so that they can become self-sustaining. This means covering initial staffing costs, training and development and other operational costs such as office rental and equipment,” OfReg CEO J. Paul Morgan stated in the press release. “Although OfReg ran a loss in its first year of operation because it did not receive this initial funding, the ICT and electricity sectors are already self-sustaining, proving that the model does work as the regulator ramps up its activities in providing the consumer protection services which it is mandated to provide without being a drain on the public purse.”