OfReg chairman Linford Pierson went on the offensive Wednesday, taking aim at the auditor general’s performance audit into the local regulator and questioning the report’s validity and its objectivity.
Pierson, testifying before the Public Accounts Committee in the Legislative Assembly, said he did not agree with how the audit was handled and said he was not consulted during the process.
On Wednesday, the PAC enquired into the findings of Auditor General Sue Winspear’s report, titled ‘Efficiency and Effectiveness of the Utility Regulation and Competition Office (OfReg) – June 2020’ which found that OfReg’s first three years in operation have been plagued by a lack of strategic planning, little oversight and inconsistent leadership.
Pierson, in defending the operations of the regulator, admitted there were challenges, but said OfReg’s achievements were overlooked by the auditor general.
He contended that the audit was done in what he termed the “old school-style of name and blame and for sensationalism”, adding that it was conducted outside of the legally set three-year timeframe for a performance audit for OfReg.
Winspear defended her report, saying that under the Constitution, she can begin an inquiry into any government entity at any time.
She apologised that she did not personally meet with Pierson, saying it was not meant to be discourteous, but she said the regulator was involved in the conduct of the audit.
PAC chairman Ezzard Miller urged the OfReg chairman not to take the comments personally as he pointed out that the audit was triggered after attempts in the Legislative Assembly to defund OfReg and close it down.
While Pierson took Miller’s point, he said the report said covered three years, but the audit commenced before that period was completed, and he had sought legal advice on the issue.
Bodden Town West MLA Chris Saunders interjected, questioning whether Pierson was saying the audit was “premature”. Saunders said the report stated June 2020 and OfReg commenced in 2017, which covered three years.
View Wednesday’s PAC morning session:
Pierson also stated that information from OfReg was contained in the report without it being acquired through discussions with the regulator. He also suggested that the report and the comments made by Winspear were “strange”, since as chairman he was excluded from the process.
Pierson, responding to questions from Miller, said, in his view, OfReg was unique and it was the only three-tier regulator in the region.
He told the Public Accounts Committee that despite the report’s findings, OfReg had a succession plan that was formulated by former CEO JP Morgan and it was already in progress. He said if the Auditor General’s Office had communicated with his team, it would have been provided with the succession plan, but he asserted that the office was not looking for “factual” information.
Winspear objected, saying that her office was at “absolute” pains to make sure the report was factual and her team had had a lengthy meeting with Pierson.
“It is somewhat disturbing and a bit alarming that Dr. Pierson felt that that it was not factual,” Winspear said.
Pierson defended a $2,500 pay increase he authorised for Morgan which was flagged in the report.
He said he did not take a “unilateral” decision when increasing the salary, which he said was justified given Morgan’s expertise as a leading regulator and specialist in the Caribbean.
He said that was a decision that was made based on consulation with the-then Minister Kurt Tibbetts, Deputy Governor Franz Manderson and the Civil Service Human Resources department.
Saunders questioned what needed to be done to make OfReg efficient and achieve its objective.
“No one here wants OfReg to fail,” he said, stressing that utilities need to be regulated.
Pierson said the best option had been to amalgamate regulators to create OfReg, but he said that coming together “it is not an easy deal.”
OfReg is an amalgamation of the Information and Communications Technology Authority, the Electricity Regulatory Authority and the Petroleum Inspectorate.
“Trying to pull some of those legacy companies takes time,” Pierson said, adding that it had taken some measure of corralling, “so much so I was accused of being a bully when you try to bring things together”.
Saunders questioned why consumers are not seeing prices drop at the petrol pumps or lower electricity bills, given the low international fuel prices, and why they are not seeing value for money when it comes to broadband internet.
Pierson said, in the case of the Caribbean Utilities Company (CUC), that is what happens when there is a monopoly.
He said liberatisation, which he said he introduced into the telecoms market during his tenure as minister, brought prices down, “but we seem to be having the problem”.
Pierson said it is not very easy to bring in price controls “which is why we depend on proper competition within the market”.
He also lamented that OfReg has four papers before Cabinet that are awaiting approval.
A paper submitted in September last year dealing with proposed anti-competitive practices and penalty rules, he said, still has to be approved by Cabinet. Amendments to Dangerous Substances Regulations, he said, was submitted in February and had not yet been approved.
He said he also questions prices when he to pay a bill to the water company or CUC.
“Until you can get proper competition for CUC, you will have very little choice in determining what level of price they will charge,” he said.
Prospect MLA Austin Harris questioned the governance structure within OfReg and whether any independent investigation was being done as a regulator to look at fuel prices.
Pierson said that an investigation is ongoing.
West Bay North MLA Bernie Bush asked about the wastage of $355,000 by the regulator in leasing a property that it never moved into, but Pierson said the endeavour was undertaken on the promise that funding would have been provided.
He said that promise was not fulfilled and the regulator got entangled in litigation over the lease for breach of contract.
He also stressed that amendments to the Utility and Competition Office Law that brought the regulator in line with the Public Authorities Law and provides OfReg with a measure of protection against litigation for early years of operation needs to be implemented.
Cabinet Secretary Samuel Rose and Gregg Anderson, OfReg executive director of energy and utilities, appeared before the committee in the afternoon session.