OfReg’s 2018 budget is larger than last year’s

Regulator now receiving funding from fuels sector

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.

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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.”

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  1. What has OfReg done to make the life of the average Cayman or ex-pat better? They just spend money and what benefit does the public get?

    Our internet is slow and expensive. Cellular has poor service and lousy coverage. Fuel prices are too high. Electricity is ridiculous!

    OfReg has no goals. Wastes money. We should start over, get some experts who can help the public. That is more important that a few high paid jobs to some political hack!

  2. So that bigger budget means that all of the staff of OFReg can take longer training trips . I would have thought that all Taxpayers would have made sure that last world tour of expenses were settled before OFReg got a new budget or anything else .

  3. I will be the first to admit I’m not familiar with the operations of the Regulator. However it seems that Mr Morgan is raising additional revenue from the providers he oversees, i.e fuel, electricity, water and telecommunications. If my assumption is correct then it is inevitable that these suppliers will pass on these additional costs to their customers – the taxpayer. If this is the case how can Mr Morgan claim he will soon be providing his regulatory services “without a drain on the public purse”?.
    I would also question why Mr Morgan in his press release made no reference to the astounding amount of overseas trips made in the last 12 months for which he is directly responsible, and of which he was a major participant.

  4. Someone told me a few days ago that the people of Cayman is awake . How can that be ? When everyone is sitting down and letting OFReg continue to waste Taxpayers money on lavish travel , and raise YOUR PRICES OF UTILITIES , and give YOU poor services, and government continues to give them more money /budget to destroy . How can we sit down and allow this to happen ?

    Wake up and read and answer the questions that J Bodden is asking .