JPS compensation shorts out

Due: $140 million; Paid: $9 million

BY CAMILO THAME Business Co-ordinator thamec@jamaicaobserver.com

Wednesday, February 15, 2012

JAMAICA Public Service Company (JPS) and National Water Commission (NWC) continue to report high levels of breaches of the guaranteed standards that are supposed to guide the quality of service that they deliver to customers, according to the Office of Utilities Regulations (OUR).

In 2010, JPS reported 83,000 breaches, which would have cost the company $140 million if they had to fully compensate customers. Only $9 million of that amount was paid.

Similarly, NWC reported 30,000 breaches valued at $58 million in possible compensation in 2010, but only paid out $600,000.

The low level of compensation for breaches is not new. Before 2010, the utilities paid out less than two per cent of possible compensation.

According to the latest figures published by the OUR in its annual report for 2010/11, if it weren't for automatic credits to some customers' accounts, it would have been even lower.

In the case of JPS, the regulator said that compensation was based on claims submitted by customers and for those specific breaches to which automatic compensation applies, while for the NWC, the payout was "primarily as a result of automatic credits where applicable as claims submitted for other breaches continue to be low".

The system is supposed to translate into improved service but as long ago as 2007 the OUR was warned that a non-compulsory system did not offer tough enough enforcement.

If claims remain low, the utilities will have little financial incentive to stop their breaches.

The two utilities combined reported 387,989 breaches over the four years from 2007 to 2010, valued at $817 million, but only paid $11.6 million in compensation to customers.

The number of breaches reported by JPS in 2010 were at the highest level since 2007, when the OUR began reporting them.

The number of NWC breaches rose by 15 per cent in 2010 compared to a year earlier, although its peak was in 2007 — 53,000 breaches.

In March 2007, an audit review of the JPS billing system concluded that, among other things, the system for monitoring and enforcing compliance with its directives should be improved.

It also recommended that the OUR introduce a "system that makes payment for breaches of the guaranteed standards compulsory, as against a system that relies on individual consumer claim".

JPS guaranteed standards that require automatic compensation include reconnection of service within 24 hours, 20-working-day replacement of faulty meters, wrongful disconnection, and five-hour reconnection after wrongful disconnection.

It is not clear which performance measures for the NWC carry automatic compensation.

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