After losing some $300,000 by the end of March, the Utility Regulation and Competition Office, known as OfReg, was on track to be insolvent by July before government injected $1 million into the territory’s regulator, Premier Alden McLaughlin said on Thursday in the Legislative Assembly.
OfReg’s financial woes earlier this year followed a nearly $1.5 million operating deficit in 2017.
Mr. McLaughlin described the financial difficulties as “teething challenges” for the regulator, which was established in January 2017.
Some of the financial shortfalls stem from the fact that fee structures for the fuel and water sectors have not been put in place, said Mr. McLaughlin. Along with government’s $1 million cash injection, the premier said another $1.15 million had to be allocated to OfReg to fund its fuel regulation office, due to the lack of fees in place.
OfReg told the Compass in July that it hoped to be financially self-sufficient by the end of the year, but Mr. McLaughlin said on Thursday that fee regimes have not yet been considered by Cabinet.
Along with a lack of fees, OfReg has also spent more than budgeted on multiple items, including travel, consultancies and legal fees.
OfReg’s 2017 annual report states that it spent $1,052,451 on consultancy and professional fees, which was $177,368 more than the office budgeted for last year. The overspending took place because OfReg needed more consultancy services in the telecommunications sector to handle an increased number of projects, the report states.
OfReg also spent $243,752 on legal fees last year – nearly $37,000 more than budgeted; $234,233 on travel-related activities, which was nearly double what was budgeted; and $304,630 on “other operating expenses,” which was $49,997 more than budgeted.
The budget projected a reduction in travel-related expenses to $116,600 in 2018. But this has not been the case, as records obtained by the Compass in July show that OfReg had 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.