September 23, 2021

The Editor speaks: OfReg the costly regulatory government office

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I rarely comment on Freedom of Information requests sourced from another media company’s article.

Today is an exception.

It is with some amazement to learn from an article published recently in the Cayman Compass that states OfReg, the government Utility Regulation and Competition Office, spent nearly $2 million on consultancy and professional fees since its inception in January 2017. This information was gleaned from a Freedom of Information request.

It was only in July this year OfReg received a cash injection from government after it had spent over one million dollars on consultants it had used. Now we learn this figure was only fifty per cent correct.

Of Rg began its life to become a more efficient body when it merged the Information and Communications Technology Authority (ICTA), the Electricity Regulatory Authority and the regulatory arm of the Water Authority, as well as creating a new fuel regulator.

OfReg CEO J. Paul Morgan said, after receiving the cash injection, “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. Although OfReg ran a loss in its first year of operation because it did not receive this initial funding, the ICT and electricity and 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.”

Soon after this statement, Deputy CEO Alee Fa’amoe stated on local radio show, CrossTalk, that it would soon be paying its own way. He explained that almost half (44%) of the spending was on developing the team through specialist training.

This specialist training was said then to be in the region of $370,000 that included travel. Fa’amoe explained OfReg had represented Cayman at key conferences, especially relating to the .ky domain, which, together with regulatory conferences, was another large chunk of the expenditure.

From the FOI request we now learn $1,922,876 in consultancy and professional expenses through the first 18 months of OfReg’s existence is already $200,000 more than the regulator had budgeted for in 2017 and 2018 combined!

The Comapss article says “OfReg’s biggest expense for regulatory-related consultancy services was $317,128 to the Canada-based Rockwater International Communications Advisors Inc., whose executives include Frans Vandendries, the former vice president of legal, regulatory and corporate affairs for Cable & Wireless in Cayman through 2014. According to the agreement between the two parties, Rockwater is paid to “provide expert regulatory and policy advice” to OfReg.”

It further says, “Other regulatory consultancy expenses include $23,888 paid to Charles Farrington, who was the executive director of OfReg’s energy and utilities office until he retired in 2017. After his retirement, Mr. Farrington continued to assist OfReg in implementing the National Energy Policy, negotiating the renewal of the operating license for the Cayman Water Company, and “provide general guidance to staff on Energy and Utilities regulation and related matters,” according to his consultancy agreement.”

Although Glen Daykin was replaced by Alee Fa’amoe, he was contracted to assist in processing licensing applications, provide website support, and provide general guidance to staff on ICTA-related matters. Daykin had been the acting head of ICTA.

OfReg has explained that it needs to spend millions on consultants because its staff lack the skills to carry out the office’s regulatory work.

When is the staff going to obtain the necessary skills and why were they emplyed without the necessary skills to do the job!

You can read the whole Compass article at: https://www.caymancompass.com/2018/11/05/ofreg-consultancy-expenses-balloon-to-2-million/

You can easily judge for yourself how “efficient” OfReg is as it monitors the fuel prices and the actual speed of our Internet services we are supposed to receive. Not forgetting how some of the cable companies get away with the lack of providing local news coverage and local programming content.

Then there is the ongoing court case OfReg has against Caribbean Utilities Company (CUC) subsidiary DataLink Ltd over the charges for hanging fibre optic cables on CUC’s poles.

Perhaps self regulation, with some government oversight, might be tried. It would be less costly and the achievements executed by OfReg and it regulations  would seem to be the same.

I leave you with the last paragraph in the Compass article:

“The expectation is that in the short- to medium-term, consulting and training costs will be high,” the report states, “but consulting costs will trend downwards as the effects of the training and development initiatives are realized.”

I spluttered in my cup of tea when I read that!

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