our annual report for web

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2/692 Ofce of Utilities Regulation / Annual Report & Financial Statements 2010 - 11

A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

Organisation Chart

Mission Statement

Introduction & Objectives

Director Generals Statement

SECTOR REPORTS

Consumer & Public Affairs

Electricity

Telecommunications

Water & Sewerage

Transportation

Administration/Human Resources

Key Performance Indicators (KPI)

Outlook and Work Programme for Fiscal 2011/2012

FINANCIAL STATEMENTS Year ended March 31, 2011

Index

Independent Auditors Report to the Members

FINANCIAL STATEMENTS

Statement of Comprehensive Income

Statement of Financial Position

Statement of Change in Reserves

Statement of Cash Flows

Notes to the Financial Statements

SUPPLEMENTARY INFORMATION

Statement of Income

Schedule of Expenses

2

3

4

5

10

12

17

24

26

26

27

29

31

32

35

36

37

38

39-66

67

68

contents



organisationchart


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To contribute to national development by creating

an environment for the ecient delivery of utility

services to the customers whilst ensuring that

service providers have the opportunity to make a

reasonable return on investment.

MISSION STATEMENT

Ofce of Utilities Regulation / Annual Report & Financial Statements 2010 - 11 3


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INTRODUCTIONThe Oce of Utilities Regulation Act of 1995established the Oce of Utilities Regulation(the Oce/OUR) as a body corporate.Under the Act, the OUR is charged with theresponsibility of regulating the provision ofutility services in the following sectors:

Electricity

Telecommunications

Water & Sewerage

Public transportation by road, railand ferry

OBJECTIVES To ensure that consumers of utility

services enjoy an acceptable qualityof service at reasonable cost.

To establish and maintain transparent,consistent and objective rules for theregulation of utility service providers.

To promote the long-term ecientprovision of utility services for

national development consistent withGovernment policy.

To provide an avenue of appeal forconsumers who have grievances withthe utility service providers.

To work with other related agenciesin the promotion of a sustainableenvironment.

To act independently and impartially.

THE OFFICEThe Director General and Deputy DirectorsGeneral comprise The Oce. The DirectorGeneral is appointed by the GovernorGeneral and the Deputy Directors Generalare appointed by the Prime Minister.

This, the Fourteenth report of the Oce,will inform Parliament and the country atlarge of the regulatory activities of the OURfor the calendar year 2010 and its nancialoperations for the scal year April 1, 2010 toMarch 31, 2011.

Ofce of Utilities Regulation / Annual Report & Financial Statements 2010 - 115


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The Annual Report is an opportunity to give an account

to our stakeholders by providing an assessment of

what has been achieved, the current priorities, the

challenges ahead and the plans in place to meet them.

The report also intends to provide information to allow

a discerning public to make a judgement about therelevance and value of the work that the OUR seeks to

accomplish.

The OUR has been selected, based on its advanced

strategic preparation, as one of the initial twelve (12)

entities to be accorded full devolution. This will put

the OUR in a better position to assume signicant

control over its nancial and human resources and be

accountable for agreed objectives.

Even before the decision to grant devolution, theOUR had developed strategic plans to dismantle

professional silos that required the technical sta being

assigned and working primarily according to sectors.

An emphasis of the OURs approach going forward, is

to deploy professionals seamlessly across the various

utility sectors over which the Oce exercises its remit.

We committed last year to ensuring that the OUR

acts in tandem with its mission statement. Within this

context six mission critical objectives were established

viz:

1. Lowering utility costs (particularly electricity)

and improving competitiveness:

The process for achieving this objective is nowunderway. The tender process to procure 480

megawatts of generating capacity weighted in favour

of natural gas, commenced during the year. At the

time of preparation of this report the OUR was in the

process of commissioning evaluation of competitive

bids for this capacity. It is worth noting that this is

the rst time in decades that the power sector has

embarked on a planned and timely expansion and a

retirement schedule. Commissioning more ecient

generation capacity is of course only one critical part

of the equation for lowering electricity generation

costs.

It is equally important to focus on the procurement

of fuel which represents about 65% of the cost of

electricity and is a direct pass through to customers. To

this end, the OUR has highlighted to the government

the need to put in place a mechanism for regulatory

oversight of the procurement of fuel and its pricing. It

is envisaged that this will cover:

competitive sourcing, access

to scarce infrastructure

(docking, loading and

storage) and determination

of appropriate indexation

mechanisms for reference

prices/freight, insurance

and ocean losses. The OUR

also takes the position that

a review of the Common

External Tari as it applies

to fuel prices is desirable

dirctor nrlssttmnt

... the OUR has

highlighted to thegovernment the

need to put in place

a mechanism for

regulatory oversight

of the procurement of

fuel and its pricing.



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

as its removal would see an immediate reduction in

electricity rates.

2.Modernizing the countrys utility

infrastructure and ensuring greater

availability of services at economic rates:

The OURs eort in this regard is on-going. Last year

we reported on the initiative taken to speed up the

deployment of smart meters in the electricity sector

by the earmarking of a special fund in the electricity

tari for this purpose. It is anticipated that smartmeters and ultimately the development of a smart grid

will inter alia: allow for better control of losses, enable

easier switching by customers, enhance customers

ability to monitor and adjust consumption, reduce

theft and improve information ows to customers as

well as receive accurate actual readings and bills. A

recent publication by the European Regulatory Group

for Electricity and Gas noted that Due to the fact that

smart meters are included in the IT-Infrastructure of the

network operator, there exists a high potential for process

optimization and savings in operational costs. Using the

synergies could also lead to further benets.

We are also of the view that the use of Smart Meters

is one of the critical indicators of the growing

phenomenon of utilities convergence which

is further revolutionizing how services are

received and costs allocated to the public.

In this regard the OUR has indicated that

the call in some quarters to separate

telecommunications regulation from

electricity is not only likely to increase

the total cost of regulation and weaken

regulatory capacity but is also counter tothe emerging trend with regard to utilities

convergence. This is manifested by such

phenomenon as the delivery of broadband

over the copper line and the use of common

billing and network security systems for

utilities, as well as the development of

smart grids that would allow integration of renewables

into the supply system.

3. Speeding up the turnaround time for

decision making:

The impending move to de-concentration of authority

and the utilization of the necessary IT tools will assist

in this area. The de-concentration of authority will

eliminate the long delays often encountered in

operationalizing decisions because of the need to

obtain administrative approval from the Ministry ofFinance and or the Cabinet Oce. For its part, the

improved IT infrastructure will allow sta real time

internal access to data thereby reducing turnaround

time for projects and instantaneous responses to

requests for information and statistics. The OUR is also

constantly reviewing its own internal processes with a

view to reducing the time taken to make and enforce

decisions and to secure redress for the public.

4. Serving as a central repository for easily

accessible information to inform all utility

related decisions and stakeholders:

Assistance provided by the Inter-American

Development Bank (IDB) has been pivotal to

the attainment of this objective. The process

to engage consultants to provide

recommendations, training and assist

with procurement and installation of

relevant hardware and software took

place during the year. Training has

begun, some hardware and software

have been acquired and the process of

building and conguring the network is

underway. The OUR intends to appoint

a highly qualied Chief Information

Ocer/Director IT to develop and

manage the relational database. It is

anticipated that the OUR will be able to

transition to this database within the

next period.

... to separatetelecommunications

regulation from

electricity is not onlylikely to increase

the total cost of

regulation andweaken regulatory

capacity but is

also counter to theemerging trend with

regard to utilities

convergence.


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5. Improving efciency and effectiveness

through a comprehensive monitoring

system:

A Utility Monitoring Division has been established and

staed. While its role and functions are still evolving,

the Division has identied several priority areas

across the regulated sectors. These include intensive

regulatory oversight of a multi-billion dollar eciency

improvement programme in the water sector and a

multimillion US dollar energy eciency improvement

programme for JPSCo. In collaboration with theRegulation and Policy Division, arrangements for the

development and publication of a number of standard

data reports on the regulated utilities are at various

stages of completion. Indeed quarterly data reports

for the telecommunications sector are already a part

of the reporting regime and those for electricity and

water should come on stream in the next scal year.

6. Delivering tangible benets to

consumers and easing social disaffection:

The OUR continues its drive to increase the awareness

of and the consumers participation in the Guaranteed

Standards scheme. The scheme represents an agreed

minimum level of service to be provided by a utility

to the consumer. The Oce continues to monitor the

number of breaches committed by the utilities and

ensures that the consumers are given the requisite

compensation where a claim is led. Compensation

to the consumer is also

accomplished using an

automatic mechanism

for some of the

guaranteed standards.

This was introduced for

the NWC in 2008 and the

JPS in 2010.

The Oce also

recognises that the

continued engagement

of its stakeholders is

critical to its decision making process. The traditional

means of consultation with our stakeholders such

as media workshops and public fora are still being

employed. However, we will have more in- depth

consultations and exchange of ideas on an on-going

basis with industry and sector leaders.

RENEABLE ENERY

The OUR is cognisant of the limitations of

renewables for a country such as Jamaica, given

such considerations as high initial investment costs,

limited capacity to oer subsidies, the nascence of

the various technologies and in some instances their

unsuitability as base load capacity. Even so, increasing

the contribution of the renewables as a portion of

the countrys power capacity is a vital objective

given the need for diversication, reduced fossil

fuel dependency, savings on foreign exchange and

protection of the environment. In this regard the OUR

notes with some satisfaction that during the year, theJPS commissioned its wind turbines at Munro College

and completed signicant work on its proposed hydro

plant at Maggotty, both in St. Elizabeth.

Wigton has also concluded an agreement with JPS

for the commissioning of its fourteen megawatt (14

MW) wind farm. This cleared the way for the Oce to

recommend to the Minister of Energy and Mining the

issuance of a license for the facility. Wigton has also

submitted a new request to the Oce for a license for

an additional four megawatt (4MW) plant.

The development of a policy on net billing on which

there has been extensive consultation during the

year is far advanced. The OUR anticipates that the

promulgation of such a policy with a standard oer

contract for capacity below 100 kW will provide a llip

to persons or entities wishing to invest in renewables

for small capacities.

The Oce continues

to monitor the

number of breachescommitted by the

utilities and ensures

that the consumersare given the requisite

compensation where

a claim is led.



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The matter of the OURs Declaration of the Avoided

Cost of Generation has been the subject of some

misunderstanding. It is therefore important to

underscore that the calculation of avoided cost is a

technical exercise and the tari that is established

by that process is not in and of itself a tool for the

encouragement of renewables. Ultimately, what

determines the level of renewables is policy backed

by legislation and a determination of what level of

subsidy and or incentive is appropriate to attain the

desired target for renewables as a percentage of

total electricity supply. In this regard, we continueto encourage the government to move beyond the

statement of a policy for the promulgation of the

statutory framework to ensure attainment of the

desired levels of investment.

Natural as Project

Although not falling directly within its remit, the OUR

was called upon to provide advice, recommendations

and expert assistance to the government with respect

to the introduction of Natural Gas into Jamaicas

energy supply mix. There will be a requirement tobuild new Infrastructure to facilitate the transition to

Natural Gas as a main source of fuel for the generation

of power using combined cycle technology. However,

before natural gas can be introduced into the countrys

energy supply mix, an appropriate natural gas policy,

legislation and regulatory framework must be put in

place. The Oce has been active in providing advice

on the statutory and regulatory framework that is

required for facilitating investment in the construction

of natural gas facilities and the

integration of natural gas as a major

source in the countrys fuel mix. Inpreparation to regulate a Natural

Gas Sector, the OUR has already

begun to expose and train its sta

with respect to issues in Natural Gas

regulation and has also begun to

develop the appropriate links and

networks with international bodies

and regulatory agencies involved

in this industry. In fact I am a member of National

Association of Regulatory Utility Commissioners

(NARUC) Committee on Natural Gas.

Management Accountability Framework

The priorities outlined above are also reected in

the Management Accountability Framework to

which the OUR is committed as part of the Public

Sector Transformation initiative. The policies and

programmes, objectives, indices and deliverables set

out in the Management Accountability Frameworkwill, in the next reporting period and beyond, be

the benchmark for assessing the OURs performance.

Among the major commitments set out in the

Framework document are:

The attainment of a raft of legislative changes

aimed at accelerating the speed with which

matters are addressed, mandating minimum

quality standards, enhanced enforcement

powers and options, set timelines for tasks and

increased reporting against established targets

and indices.

Provisions for assessing and measuring customer

satisfaction, for on-going and constructive

engagement of stakeholders including the

development of a citizens charter and the

adoption of measures and mechanisms to enhance

both internal and external accountability;

Specic measures to enhance the development

and orientation of the sta and the OUR toward

delivering better regulation in the public

interest and value for money in terms of the

regulatory budget;

Greater focus on risk management to ensure

the sustainability of the OUR, its adaptability to

contingency and its eectiveness in mitigating

the adverse eects of imponderables in the

regulated sectors.

... an appropriatenatural gas

policy, legislationand regulatory

framework must be

put in place.


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Zia Mian

Director enral

Notably, as part of the commitment to ensuring

accountability, the OUR has followed through on

its promise to establish an Audit Committee. That

Committee is up and running and has already

provided several recommendations for improving

operations. Specic arrangements were also made

for an internal audit function during the year and

the Policy and Procedures Manual which addresses

both internal and external elements of the Oces

operations is under review. The updated manual

will be in place by the end of the next reporting

period. The OUR has also embarked on obtaining ISOcertication to establish procedures to deliver high

quality service to all stakeholders.

Im also pleased to be serving as Chairman of

the Organisation of Caribbean Utility Regulators

(OOCUR) and as 1st Vice Chair of the Commonwealth

Telecommunications Organisation (CTO). In the

capacity as Chairman of OOCUR, it was my pleasure

to have hosted the Organisations 8th annual

conference as well as a council meeting and general

assembly in Ocho Rios, St. Ann in November. The

three-day conference saw a number of regional andinternational participants and was ocially opened

by the Deputy Prime Minister Dr. the Honourable

Kenneth Baugh. Feedback from participants

indicated that the conference was successful.

CONCLUSION

I remain convinced that

no matter the challenges

and uncertainties of the

regulatory environment,

the regulator must

maintain as its primary

focus, enhancing and

protecting the public

interest. In the medium

to long term, thetrue measure of this is

reected in: on-going utility

investments (expected to be over US$ 1.2 billion),

utility markets that are dynamic and innovative,

expanded services to customers and the delivery

of these at lower economic cost and with better

customer service. The OUR is committed to these

objectives and I rmly believe that the institution

has the orientation and the personnel to deliver

on this mandate. I also anticipate that those who

have the ability to inuence our resources and to

create and facilitate an environment conducive tothe delivery of our mandate will provide us with the

requisite support and necessary tools. I look forward

to another successful year.

... the regulatormust maintain as

its primary focus,enhancing and

protecting the

public interest.



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

CONSUMER & PUBLIC AFFAIRS

The Consumer and Public Aairs (CPA) Division, in

keeping with its mandate, continued its eorts at

ensuring that the interests of utility consumers were

adequately protected throughout the year. The Public

Aairs arm of the division continued its aggressive

public education programme through its media

information sharing sessions, mass media productions

and remained active in developing and maintaining

relationships among stakeholder groups.

Appeals

For the 2010 calendar year, the division accepted

for investigation, one hundred and thirty-nine

(139) new appeals. In addition to the new appeals,

one hundred and twenty-two (122) appeals which

remained unresolved in 2009 were carried forward to

2010 bringing the total number of appeals requiring

attention during the year to two hundred and sixty-

one (261).

Of the 139 new appeals, 89 (64%) were related to

services provided by the Jamaica Public Service

Company (JPSCo) while 50 (36%) were related to

services provided by the National Water Commission

(NWC). No appeals relating to services provided by the

telecommunications companies were received.

Resolution of Appeals

Of the 261 appeals that were investigated in 2010, 184

(70%) were resolved/closed as at December 31, 2010.

Of those resolved, 44 (24%) were resolved in favour

of the customer while 134 (73%) were resolved in the

utilities favour. The remaining 6 (3%) included matters

that were mutually resolved between the customers

and the service providers and those that the OUR

closed as a result of customers failure to provide the

required information to facilitate the review.

Predominant Concerns

Similar to previous years, billing related matters

continued to be the main cause of appeal to the OUR

during 2010. Concerns regarding

billing accounted for 77% of

total appeals received.

As it relates to JPSCos

services, the matter of

billing adjustment was the

predominant basis for appealsto the OUR. These adjustments

were applied based on

allegations by JPSCo that there

was evidence of irregularity

at the premises. Some of these

alleged irregularities included illegal abstraction

(bypass etc.) and meter tampering. Investigations of

these concerns revealed that an irregularity existed at

some of the premises and the customer knowingly or

unknowingly beneted.

In regard to the NWC, the primary concern was high

consumption charges particularly during the period in

which the island was aected by drought conditions.

This situation once again brought to the fore

customers concern that air collects in the pipelines

during periods of prolonged water lock-os and

results in the meter recording an inated consumption

when supply is restored. In an eort to address the

concern, a meeting was held with representatives of

the Bureau of Standards Jamaica (BSJ) and the OUR.

At the meeting, the BSJ advised that it was aware of

a study on this subject that was being undertaken by

the NWC. The OUR requested a copy of the document

but it had not been received at the time of writing.

The NWC has however indicated that it has placed air

release valves at specic points along its distribution

pipelines to mitigate against this occurrence.

While no appeals were accepted in relation to the

telecommunications service providers, there was

concern in relation to perceived unfair billing practices

and the quality of service oered by those providers.

... billing related

matters continued

to be the main

cause of appeal

to the OUR during

2010.


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Credits and Compensation

As a result of the

OURs intervention, an

amount of $6.3 million

was secured for utility

customers in 2010. This

amount was primarily

due to a reduction in the

debit adjustments that

were applied to customers

accounts where accounts wereback-billed.

Utility Report on the uaranteed Standards

The NWC and the JPSCo continue to show high

incidences of breaches under the Guaranteed

Standards scheme. In the report from JPSCo, regarding

its performance under the

scheme for the year 2010, the

company indicated that it

committed approximately

83,000 breaches attracting

a potential compensation of

approximately $140-million.

Of this amount only

approximately $9-million

was credited for breaches

based on claims submitted

by customers and for those

specic breaches to which

automatic compensation applies.

In the case of the NWC, the company indicated that

it committed approximately 30,000 breaches in the

same period, attracting potential compensationof approximately $58-million. Credits to accounts

however only totalled approximately $600,000 and

were primarily as a result of automatic credits where

applicable as claims submitted for other breaches

continue to be low.

Public Education

The OUR continued its aggressive public education

programme throughout 2010 and provided accurate,

relevant and timely information to stakeholders.

The programme of activities included the hosting

of a successful media gathering in April 2010. The

event was organized to provide media practitioners

with information on the revised thrust of the OUR

(specically to focus on appeals), outline new initiatives

as well as to discuss various regulatory matters.

The public education programme also focused on the

delivery of messages through mass media productions.

These productions included the ve minute radio

programme Inside the OUR; the introduction of

time signal messages as well as newspaper strip

advertisements. During the year, the frequency of

the newsletter publication The Regulator increased

from twice yearly to four times per year.

While a strategic decision was taken to suspend Parish

Day activities during the reporting period, the OURs

interactions with its largest stakeholder group, utility

consumers, were maintained through participationin several activities organized by church/community

groups and other private organizations.

Utility Monitoring Division

Ocially staed and launched in October 2010, the

Utility Monitoring Division of the OUR has primary

responsibility for ascertaining whether the regulated

entities are compliant with Oce Directives, relevant

pieces of legislation, license conditions and tari

requirements. Its activities are also structured to

provide the Oce with on-going assessment ofits regulatory eectiveness. The Division carefully

monitors and assesses key utility projects and quality

standards to determine whether established targets

are met, and submits recommendations to the

Oce on the approach to be taken in addressing

issues that have arisen or are likely to arise. The

Division ensures that all decisions include measurable

... an amount of$6.3 million was

secured for utility

customers in 2010.

The NWC and the

JPSCo continue

to show highincidences of

breaches underthe Guaranteed

Standards scheme.



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

indices for assessing success

and reect regulatory

impact assessment. It

is also responsible for

commissioning regular

Regulatory Impact

Assessments (RIAs) regarding

the improvement in

eciency and compliance

with agreed service, quality

and investment targets.

The following are the general

activities of the Division:

monitor utility projects through progress

reports etc.;

monitor service standards through reporting

and customer feedback surveys etc.;

produce regular Regulatory Impact

Assessments;

conduct periodic audits of specic functions

of the utilities; prepare policy papers and recommendations

to the Oce;

maintain communication with service

providers on actions/strategies with

respect to projects and other regulatory

undertakings.

Since inception, the Division has been actively

involved in the monitoring of the multi-billion dollar

NWC K-Factor Fund. It has recommended to the Oce,

its no objection to requests from the NWC to make

withdrawals from the K-Factor Fund as well as requests

for new projects to be included in the K-Factor

programme.

The Division also monitors the cash inows and

outows and the progress of existing projects. It will

also monitor the Electricity Eciency Improvement

Fund (EEIF), the rules for which are expected to be

published early in 2011.

ELECTRICITY

OverviewIt was a historic and active year for the electricity sector.

The OUR which is charged with the responsibilityof ensuring the Least Cost Expansion Plan (LCEP)

approach to the addition of generation capacity, and

guided by the governments energy policy, began a

process for the procurement of 480 megawatts (MW)

of new generation capacity.

With regard to

renewable energy,

the Petroleum

Corporation of

Jamaica (PCJ), byMinisterial Directive,

has exclusivity on

the development of

renewables and in a

number of instances

holds the right to

the information

that is required

for the immediate

exploitation of such

resources. The PCJs

exclusivity in this regard, has restricted the OURsability to request proposals for new generating

capacity using renewable energy sources.

This arrangement is further compounded by a conict

of interest in light of the PCJs interest in participating

as a competitor in the generation market. The

urgent need to have this matter addressed has been

The Division

ensures that all

decisions includemeasurable indices

for assessing

success and reectregulatory impact

assessment.

PCJs exclusivity

in this regard, has

restricted the OURsability to request

proposals for newgenerating capacityusing renewable

energy sources...

such exclusivity isinconsistent withthe

new energy policy.


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A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1


communicated by the OUR to the political executive,

as such exclusivity is inconsistent with the new energy

policy.

In regard to wind and hydro power as renewable

energy sources, the OUR maintains its position that

there is need for further studies over an extended

period on the variability of wind speeds and river

ows.

Procurement of 480M of enerating Capacity

on a Build, Own & Operate (BOO) Basis

The OUR has the responsibility for overseeing the

procurement process for additional electricity

generating capacity. In this regard, a Request for

Proposal (RFP) for the supply of up to 480 MW of

Base-Load Generating Capacity on a Build, Own and

Operate (BOO) basis was sent out to the industry on

December 13, 2010. Prospective applicants oering

cogeneration solutions were aquired to submit their

proposals for consideration. As part of this solicitation,

alternative proposals would also be considered.

Based on the 2010 indicative Generation ExpansionPlan, a block of 480MW is required over the next six

(6) years. This is required to be commissioned in two

tranches: 360MW by January 2014 and the remaining

120MW by January 2016.

The Ministry of Energy and Mining (MEM) in its

National Energy Policy 2009 2030 identied fuel

diversication as one of its main objectives. The policy

states that as part of the diversication strategy,

natural gas will, in the short to medium term, be the

fuel of choice for the generation of electricity and the

production of Alumina. This was factored into the RFP,which indicated that bids conforming to the energy

policy would receive a premium in the evaluation

process. The OUR has determined that the indicative

all-in avoided cost of electricity is US$0.1005/kWh and

this cost reects the long run generation cost that is

expected from the bids.

Commissioning of the JPSCo 3M ind Farm at

Munro, St. Elizabeth, October 13, 2010.

The Jamaica Public Service Company Ltd. (JPSCo) was

successful in two of its three responses to the OURs

March 25, 2008 Request for Proposals for the supply

of Electricity from Renewable Energy Based Power

Generation Facilities on a Build, Own and Operate

(BOO) Basis.

The three proposals submitted by JPSCo were the

Munro Wind Farm 3MW, the Maggotty Hydro

6.3MW and the Great River Hydro 8MW projects. Thesuccessful projects were the Munro Wind Farm and

the Maggotty Hydro. Of these two, the Munro Wind

Farm was the rst to be constructed and is the second

wind farm in operation in Jamaica.

round Breaking for JEPs 65.5 M Plant

The Oce on the 7th May 2008, issued a Request for

Proposal (RFP) for the Procurement of 60 MW of new

capacity. Jamaica Energy Partners Ltd (JEP) was the

successful bidder.

JEP sought and obtained approval from the OUR to

make available an additional 5.5 MW of capacity above

the 60 MW requested in the RFP. This request to provide

additional capacity was approved in accordance with

the Government of Jamaicas Procurement Guidelines.

The ground breaking ceremony for the 65.5 MW power

plant was held on December 2, 2010. The facility which

is called West Kingston Power Partners is a subsidiary

of the Jamaica Energy Partners and will be located at

Industrial Terrace in West Kingston.

igton indfarmII PPA and Price Determination

Wigton Windfarm Limited (WWFL) is a company duly

incorporated under the laws of Jamaica and whose

principal shareholder is the Petroleum Corporation of

Jamaica.



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

WWFL has proposed to sell energy to the grid from the

new project, Wigton WindfarmII with capacity totalling

14.98 MW. The facility is being designed to achieve an

average annual capacity factor of approximately 35%

(representing an average annual capacity of 5MW). A

Power Purchase Agreement (PPA) is being nalised

between Wigton and the Jamaica Public Service

Company Limited (JPSCo).

WWFL requested a review of the Energy Payment Rate

which was contracted under the Power Interchange

Agreement (PIA) between itself and the JPSCo in 2010.In its application to the OUR, WWFL requested a review

of the rate per kilowatt hour based on the avoided

cost plus 15%. WWFLs request was in keeping with the

October 2009 National Energy Policy which states that

Jamaica would ...Introduce incentives, where feasible,

and a plan of action for implementation to foster the

development of wind, solar and renewable technologies.

This will require the review by the regulatory authority

of existing renewable power generators to aord them

such incentives that may be available, to encourage the

sustainable development of the sector.

Standard Oer Contract for Net Billing

The Standard Oer Contract (SOC) is geared towards

assisting Jamaica to meet its renewable energy

supply targets by providing an opportunity for small

electricity generators to provide energy to the grid

through a standard pricing regime and a streamlined

process.

This initiative will help the Government of Jamaicas

stated Energy Policy objective of having 15% of total

energy generation coming from renewable sources by

2015. It will also widen competition in the generation

market since it will facilitate householders and others

involved in self-generation to sell their excess power

to the grid.

The SOC will be a legal document required to be signed

by the small power supplier [with excess energy sales

from renewable technology with capacity up to 100kW]

and JPSCo. The SOC will outline a predetermined

price structure and a well-dened interconnection

arrangement. The SOC will also include the eective

date and terms of all ownership, insurance, operating

and maintenance agreements. Additionally, it will

specify the pricing formula for energy, schedule, or a

combination of the two for determining net billing.

The OUR will convene public meetings as part of the

consultation process on the SOC.

The promulgation of rules to govern the

Electricity Eciency Improvement Fund

Arising out of the Jamaica Public Service Company

Limiteds (JPSCo) 2009 Tari Submission, the Oce

approved the establishment of the Electricity Eciency

Improvement Fund (EEIF). The purpose of the Fund

is to augment JPSCos proposed capital, operation

and maintenance expenditure of US$45M on system

loss reduction initiatives over the ve-year price cap

period 2009-2014. To this end, the amount of US 0.4 c/

kWh approximately US$13M annually, is expected to

go into the EEIF from the electricity taris specically

for Advanced Metering Infrastructure and other loss

reduction technologies.

Following on consultations with the JPSCo, the Oce

issued a Determination on the Rules of Procedure.

These Rules of Procedure set out the principles,

parameters and processes to govern the operation

and administration of the EEIF.

JPSCo Annual Adjustment

The Oce is required to undertake an annual reviewof JPSCos performance under the existing price cap

regime and approve adjustments as provided for in

the Plan as it relates to movements in ination and

exchange rates. Accordingly, the OUR approved the

annual adjustment to the JPSCo tari which resulted in

an average eective increase of 1.70% on customers

bills.


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eneration & Metering Code

The Generation and Metering Codes establish

the guiding principles, operating procedures and

technical standards governing the operation of the

Jamaican power generation system. The nal draft of

the document is now being reviewed with a view to

nalizing it in 2011.

Transmission & Distribution Code

The purpose of Transmission and Distribution Codes

is to permit the development, maintenance and

operation of an ecient, coordinated transmission

and distribution system in Jamaica. This is tied to the

Generation Codes and will be completed within the

same timeframe.

JPSCo Appeal to the Tribunal Z Factor Claim for

Reclassication Exercise

By a Notice of Appeal dated April 1, 2010, the JPSCo

challenged the OURs Determination on its Z-Factor

Claim for Reclassication costs. The Determination

Notice which was issued one month earlier denied

JPSCos claim for approximately J$4.3 billion to be

recovered under the Z- Factor on the grounds that it

failed to satisfy the criteria specied in the Licence for

Z-factor adjustments.

The Claim was in relation to compensation to workers

following a reclassication exercise. The company

disagreed with the outcome of the exercise and in

particular the amount to be paid to the workers.

After several court battles the JPSCo lost its bid at the

Appeal Court to have the award quashed.

The case (Z Factor Claim) was presented to the

Electricity Tribunal in November 2010. The Tribunal is

expected to publish its ruling in 2011.

Demand Forecast

As part of the Least Cost Expansion Plan (LCEP), the

demand forecast was derived as a primary input

into the determination of electricity supply required

to meet consumer demand at the least cost. The

projected energy requirement for Jamaicas Electricity

System was developed for the period 2010 through

2030. Consequent on this assessment, system

net energy requirements and peak demand were

projected to increase respectively at a compounded

annual growth rate of 4.0 and 3.80 percent over

the next twenty years. This nding does not dier

signicantly from the previous projections in 2003and 2004 (by the JPSCo and OUR respectively) when

net energy requirements were projected to increase

at a rate of 4.6 percent and net peak demand at 4.5

percent.

Figure 1: Net system peak (M) 1982 - 2030

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

0



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

The demand forecast sought to dene

electricity consumption as a function

of the growth in the average number

of customers and growth in the level

of average use per customer. Load

research data was also used to project

peak demand (see gure 1) and net

generation (see gure 2) needed to

facilitate the assessment of the additional

net generating capacity required (480

MW by 2016) and more generally over the

forecast period.

Table 1:

*Forecast

Figure 2: Net eneration (Mh) 1982 - 2030

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

9000000

10000000

0

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

350000

700000

1050000

1400000

1750000

2100000

2450000

2800000

3150000

0

Energyin(M

wh)

Figure 3: ELECTRICITY DEMAND BY RATE CLASS 1982 2009

The analysis was based on several assumptions and a range of potential drivers of long term electricity demand,

including but not limited to the demand for Jamaican goods, growth in population and employment. These were

ascribed to the broad areas of economic activity (measured by GDP), demographics, electricity prices (and demand

responsiveness) and energy intensities (determined by the type of electricity end use and technology).


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Electricity Consumption

Figure 3 indicates electricity demand over the period

1982-2009 as inuenced by energy sales mainly from

the residential (Rate 10) and general power (Rate 40)

service classes.

Total base energy sales were forecasted at

3,231,373MWh by 2010. Similarly, this was attributedmainly to energy sales in the Rate 10 (1,133,078 MWh)

and Rate 40 (705,873 MWh) service classes (see Table

1).

Number of Customers

Table 2 shows that the number of JPSCo customers

has increased steadily over the years 1982 to 2009,

having grown by 160%. The majority of customers

are residential (R10) followed by the general service

classes (R20 & R40) which together accounted for 90%

of total customers (excluding street light) by the close

of 2009. This attributive share has not quite changed

since 1982 when the combined share was 89.10%. The

number of customers was projected to be 649, 481 at

the close of 2010.

TELECOMMUNICATIONS

In an environment characterised by litigation, it has

become even more critical for the new Information

Table 2.

*Forecast



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

and Communications Technology Policy to be

implemented.

The current environment

also emphasizes the

urgent need to revisit

the legislative and

regulatory framework

for the sector. This

is evidenced by the

numerous disputes

regarding accessto limited facilities,

i n t e r c o n n e c t i o n

charges and other

interconnection issues

which resulted in lawsuits and counter suits among

the major providers. Additionally, with convergence

gaining momentum, it becomes increasingly important

for the legislative and regulatory framework to move

in tandem with such developments, and in so doing,

ensure the strengthening of

the regulators enforcement

powers.

The OURs operation in the

sector has been met with

varying levels of success,

headlined by the Oces

successful defence against

Digicels appeal to the

Tribunal in the matter of

Assessment of Dominance

in Mobile Call Termination.

This ruling allows the OUR

to direct dominant providersto issue a Reference Interconnect Oer (RIO) which will

set out the terms and conditions of interconnections.

The OUR will then have the responsibility to approve

interconnection rates for the sector.

Notwithstanding the need to revisit the legislative

instruments governing the telecommunications

sector, it continues to perform relatively well delivering

more innovative packages with increased access to

cutting edge technology. Combined data for fixed and

mobile lines indicate that the country continues to enjoy

well over 100% teledensity attributed mainly to persons

owning more than one mobile instrument. Despite the

foregoing, there are still persons lacking access either

by virtue of economics or geographical remoteness.

Developments in the telecommunications sector

included;

Publication of the Estimate of the WeightedAverage Cost of Capital

The call for and receipt of Reference

Interconnection Oers from all carriers

Competitive Safeguard Rules

Submarine Cable Legislation/Regulations/

Guidelines

Estimate of the eighted Average Cost of Capital

(ACC) for Jamaican Telecommunications Carriers

The consultative process to estimate the weighted

average cost of capital (WACC) began on May 9, 2008with the issuing of the rst Consultation Document.

As a result of the need to broaden the scope of the

consultation, a second consultative document was

issued on August 31, 2009.

The process was quite extensive and involved

analysing various nancial techniques. Additionally,

there were requests from stakeholders for extensions

for submission of comments which were granted.

Following comments from stakeholders, the OUR

issued a Determination Notice on December 9, 2010.

The document presents the study of the cost of capital

for the business of providing xed line and mobile

telecommunications service. The Oce, among other

things, determined it will estimate a separate WACC for

xed line and mobile networks. The cost of capital will

be used in any future rate making process undertaken

by the OUR.

... it has become

even more critical for

the new Informationand Communications

Technology Policy to

be implemented.

... data for xed and

mobile lines indicate

that the countrycontinues to enjoy well

over 100% teledensity

attributed mainlyto persons owning

more than one mobile

instrument.


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Reference Interconnection Oer (RIO-6)

This document sets out the terms and conditions

under which LIME will allow other operators to

interconnect with its xed line network. The timetable

for completing this exercise was adversely aected

by delays in the provision of critical information and

requests from stakeholders for an extension of the

period for comments. The consultation document

is currently being prepared and is scheduled to be

published in 2011.

Review and Harmonisation of Mobile RIOs

Following on the ruling of the Telecommunication Appeals

Tribunal, which upheld the OURs decision that all

mobile operators are dominant for the termination

of calls on their own network, the OUR in accordance

with the provisions of the Telecommunications Act

instructed all mobile operators to submit their RIO and

supporting documentation to the OUR by September

1, 2010 for review and approval.The RIO sets out the

terms and conditions under which mobile operators

will allow other carriers to interconnect with theirnetwork. The harmonisation of the 3 mobile RIOs is

scheduled to commence at the start of the second

quarter of 2011 to create a single mobile RIO.

Competitive Safeguards Rules

The Oce, in September 2007, published a

Determination Notice on rules for the voice market.

These rules are deemed necessary to promote fair and

non-discriminatory access to restricted facilities and

reduce the incidences of anti-competitive behaviour

within telecommunications markets. Subsequent tothis Determination Notice, C&WJ (now LIME) submitted

an application for reconsideration of these rules. A

decision in this regard should be published in 2011.

Submarine Cable Legislation/ Regulations/

uidelines

This activity addresses the need to ensure that there is

competitive access to submarine cable facilities as well

as the need to protect submarine cables in Jamaican

waters. The exercise which is being funded by the

United States Trade and Development Agency (USTDA)

is slated for completion by June, 2011. Activities

undertaken in regard to this project include the review

of submarine cable, cable station and backhaul access

licensing in Singapore and other countries to assesshow these regulations can be applied to Jamaicas

situation. Other activities to be undertaken include

interviews with carriers and other key players for input

on how regulations can be developed that would

lead to fair competition in Jamaicas international

telecommunications market.

Quality of Service Rules for the

Telecommunications Sector

In keeping with its statutory responsibility to ensure

quality of service to consumers, the OUR with

assistance from the Inter-American Development Bank

(IDB), commissioned consultants in November 2009 to

review mobile quality of service and to develop quality

of service standards for providers.

The project was expected to conclude in May 2010,

but was delayed because of additional activities

which had to be undertaken by the consultants. The

service providers also failed to provide their responses

within the time stipulated and this further delayed

the project. Subsequent to overcoming the foregoing

diculties, the Quality of Service Consultative

Document Quality of Service Standards andGuidelines for the Telecommunications Sector was

published on October 25, 2010. Comments on the

document were received from the industry operators

and the Consumer Advisory Committee on Utilities

(CACU). The consultancy is expected to conclude



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

Source: O.U.R

Table 3: Distribution of Mobile Subscription &Penetration Rates (2006-2010)

Table 4: Distribution of Fixed Line Subscription &Penetration Rates (2006-2010)

Source: O.U.R

in the rst half of 2011 and thereafter the draft rules

and guidelines will be submitted to Parliament for

armative resolution.

Indirect Access: Two Stage Dialling (2SD)

The Oce issued its Determination Notice on this

matter on May 30, 2008. The Determination details

the cost benet analysis and unfair burden test for the

imposition of indirect access obligations via 2SD. LIME

requested a reconsideration of the decision and a nal

decision should be published before the start of scalyear 2011/2012.

In 2-stage dialling a caller dials two distinct sets

of numbers to reach the called destination. This is

typically used by calling card providers.

The initial number or code dialled by the caller is

not the nal destination number, but a set of digits

to activate or reach an intermediate service feature,

service platform or another network, to authenticate

the caller and/or prompt the caller (by a recorded

voice or a second dial tone, etc.) for and receive the

destination number and to route the call to the desired

destination point.

In some systems, 2-stage dialling is semi-automated

and allows a caller to dial a concatenated digit string

representative of the two sets of numbers and, in

addition to producing operational eciency gains,

gives the caller the familiar experience of single-

number dialling.

Mobile Service

The mobile sector continued to reect growth in

subscriptions up to 2010 and seminal expansion

by December 2010. This, as subscribers to mobile

telephone service totalled 3,182,000 (2010). Over

the 2006 2010 periods, growth in subscription

was highest in 2007(18%). Table 3 depicts that most

subscribers continue to opt for the pre-paid mobileservice which maintained dominance of over 95% of

total subscriptions over the ve year period.

Following the trend of increases in subscription,

mobile penetration also increased over the review

period to stand at 109.53% and 117.83% by the close of

2009 and 2010 respectively.

Fixed Line Service

Since 2007, subscriptions to xed line services as

depicted in Table 4 have been on the decline. The mostrecent decline resulted in subscriptions moving from

302,451 in 2009 to 263,060 by December 2010. This

represents a fall-o in subscription of 13.02% over the

period, and was mainly as a result of a reduction in the

number of subscriptions for residential lines. Likewise,

xed line penetration reected declines since 2007 to

stand at 9.74% by the close of 2010.


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Internet Service

Subscriptions to internet services grew by 9.92%

since 2006 to stand at 114,561 by December 2009,

and thereafter subscriptions declined by 33.4% to

a total of 76,300 users by December 2010. This has

been attributed mainly to the growth in broadband

subscriptions over the 2006 2010 periods.

The penetration rates for internet services stood at

2.83% by the close of 2010.

Table 6: Number of Telecoms Licences (2000 -2010)

Table 5: Distribution of Internet Subscription& Penetration Rates (2006-2010)

Source: O.U.R

Licences

Twelve licences were issued in 2010 resulting in a total

of 493 licences since the Telecommunications Sectors

liberalisation in 2000 (see Table 6).

Licence Terms:

DC: Domestic Carrier

DSP: Data Service ProviderDVSP: Domestic Voice Service Provider

FTZC: Free Trade Zone Carrier

FTZSP: Free Trade Zone Service Provider

IC: International Carrier (Voice/Data/Transit)

INTL. SP: International (Voice/ Data ServiceProvider)

ISP: Internet Service Provider



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

ISP (STVO): Internet Service P

IVSP: International Voice ServiceProvider

SCLC: Submarine Cable Landing Carrier

Numbering Administration & Technical Support:

The OUR, as the National Numbering Administrator,

has responsibilities for the administration and

management of telecommunications numbering

resources used by carriers and service providers inJamaica.

The OUR must ensure impartial and equitable access

to these essential resources and provide advice to the

industry on numbering issues.

The Oce undertook the following major numbering

activities during the period:

Numbering Resource Utilization/Forecast

(NRUF) Surveys

Area Code Relief Planning Extra-Territorial use of International

Subscription Identities

Adoption of Alternative Emergency Numbers

Local Number Portability

Regime for Short Code

Automation of Numbering Administration

Functions

Uniform Domestic Dialling Plan

Numbering Resource Utilization/Forecast (NRUF)

Surveys

Carriers and service providers holding geographic

and mobile telephone numbers must le Numbering

Resource Utilization and Forecast (of demand over

the next 5 years) reports semi-annually on or before

February 1 for the preceding six-month reporting

period ending on December 31, and on or before

August 1 for the preceding six-month reporting period

ending on June 30.

NRUF data support forecasts of the exhaustion date

for each area code (digits 1 through 3 of the 10-digit

telephone number). The OUR monitors central oce

code assignment rates and adjusts the projected

exhaust dates if necessary.

Area Code Relief Planning

Area Code Relief refers to an activity that must beperformed when the Oce Codes within an area code

are near exhaustion. Providing relief to such an area

code normally involves assigning a new area code.

Using the Numbering Resource Utilization and

Forecast data and historical growth data submitted by

carriers with their applications for additional numbers,

the Oce estimated that the expected exhaust period

for area code 876 is the 4th quarter of the year 2012.

Based on the Oces preliminary notication to

the North American Numbering Plan Administrator

(NANPA) regarding the imminent exhaust of the 876area code, NANPA has reserved a new area code for

Jamaica, pending formal application for its assignment.

The Oce will publish a second planning document

which will outline the activities of the second phase

of the Area Code Relief Planning Process and Relief

Implementation exercise. The new area code will cover

the same geographic area as the existing 876 area

code. This will require the dialling of the full 10 digits

of a telephone number for all local calls.

Extra-Territorial Use of International MobileSubscriber Identities

The International Mobile Subscription Identity

(IMSI) provides a unique international identication

of mobile terminals/users and to enable these

terminals/users to roam among public networks

which oer public mobility services. The IMSI, as


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provided in the International Telecommunications

Unions Recommendation ITU-T E.212, The

International Identication Plan for Public Networks

and Subscriptions, is made up of a Mobile Country

Code (MCC), a Mobile Network Code (MNC) and a

Mobile Subscription Identication Number(MSIN),

that is, MCC-MNC-MSIN. The combined MCC+MNC

identies the home network of a mobile terminal/user.

The ITU recently added Annex E to Recommendation

ITU-T E.212, to provide for the use of the combined

MCC+MNC in a country other than the country to

which the MCC has been assigned by the Director of

the ITUs Telecommunication Standardization Bureau.

In other words, Annex E provides for cross-border or

extraterritorial use of MCC+MNCs.

The Oce consulted with the local industry by way of

a Notice of Proposed Rule Making to formally adopt

and implement the provisions of Annex E in Jamaica.

The proposal was not opposed. The completion of the

requisite Determination Notice was rescheduled for

the rst quarter of the next calendar year

Adoption of Alternative Emergency Numbers

The Oce carried out an industry consultation on the

implementation in Jamaica of secondary alternative

emergency numbers (112 and/or 119) for public

telecommunications networks. This was done in

accordance with the International Telecommunications

Unions Recommendation ITU-T E.161.1 (Guidelines

to select Emergency Number for public

telecommunications networks) which was developed

based on recommendations made to the ITU by the

OUR on behalf of the Government of Jamaica.

Local Number Portability

An external consultant was engaged to carry out

a feasibility study and cost benet analysis on

implementation options for Number Portability

(NP) in Jamaica, in accordance with section 37 of the

Telecommunications Act 2000. The consultation

activities included a public workshop and individual

meetings with key industry stakeholders. The project,

which was put to international tender, was funded by

the IDBs Multilateral Investment Fund Facility.

The results of the study which are contained in the

consultants Final Report will form the basis of a public/

industry consultation and subsequent rule making.

The Number Portability rules which will govern the

implementation of number portability in Jamaica are

subject to armative resolution of Parliament.

It is envisaged thatsubsequent to an Oce

decision the actual NP

implementation exercise

will require at least

one year for successful

execution.

Regime for Short Code

The industry consultation

for the development

and implementation of

a numbering scheme using

numbers which are shorter than the regular telephone

number (common short codes) for the provisioning of

a broad range of existing and future services via text

messaging was rescheduled to the second quarter of

2011 to facilitate work on Local Number Portability.

Automation of Numbering Administration

Functions

After several attempts the Oce secured the requisite

consultancy services to automate specied aspects

of the Numbering Administration function by way of

web-based applications.

Numbering Administration involves the development

and management of the National Telecommunications

Numbering Scheme, which is a national resource, to

ensure the availability of and fair and equitable access

to telecommunications numbers. These numbers are

... Number

Portability rules

which will govern the

implementation of

number portability

in Jamaica are

subject to armative

resolution ofParliament.



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

Table 7: Production and Consumption Datafor Potable ater 2009 -2010

used by network operators and service providers to

oer telecommunications services to their customers

and by networks to initiate, route and charge for calls.

The work which commenced on October 25, 2010 has

progressed according to schedule, with a completion

date of March 25, 2011. The project is being funded by

the IDBs Multilateral Investment Fund Facility.

Uniform Domestic Dialling Plan (UDDP)

The Uniform Domestic Dialling Plan (UDDP) which was

established by the Oce to provide dialling parity for

all customers, for all domestic calls, remains before the

Telecommunications Appeals Tribunal. A hearing is

expected in early 2011.

Dialling parity means the ability of an end-user to use

an equal number of digits to access a particular public

telecommunications service, regardless of which public

telecommunications services supplier the end-user

chooses.

ATER AND SEERAE

ater Production and Consumption

Total water produced by the National Water

Commission (NWC) during the calendar year 2010 was

62 billion gallons as against 67 billion gallons in 2009.

Of this amount, billed

consumption for the

year was reported as

18 billion gallons. Thelarge disparity between

water production and

consumption indicates

that the NWC has a high

percentage of Non-

Revenue Water (NRW). At

the end of the calendar year 2010, the NWC reported

NRW as being 71%. The Oce has set a target for the

NWC to reduce its NRW to at most 55% within a three

year period. The Commission is striving to achieve this

target through its K-factor programme.

National ater Commission K-Factor Fund

Signicant progress was made during the last quarter of

the 2010 calendar year in regularising the operations of

the K-Factor fund. The primary objective of the fund is

to reduce non-revenue water through the replacementof mains and other activities, and the rehabilitation

of some sewerage facilities. The regularisation

of operations arose from the establishment of a

Memorandum of Understanding (MOU) between the

OUR and the NWC in October 2010. The objective of

the MOU is to maintain the integrity of the fund. The

OUR has also developed specic Rules and Procedures,

as specied by the 2008 Tari Determination, to ensure

the ecient and eective administration of the fund. It

is expected that these Rules and Procedures will come

into force in early 2011.

As at December 31, 2010, a total of forty seven (47)

projects were approved by the OUR for funding under

the K-Factor programme at an estimated cost of J$11.7B.

Based on the latest data available, approximately

J$1.22B has been expended on the various projects.

The large disparity

between waterproduction andconsumption

indicates that theNWC has a highpercentage of Non-Revenue Water.


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NCs Request for K-Factor Collections to be based

on Actual Collection rate

The Determination Notice of April 2008 on NWCs

rates stated that the Commission shall account for the

deemed K-factor cash inow calculated on the basis of

95% of K-factor billing.

The NWC submitted a letter to the OUR on October 20,

2010 requesting that the Oce adjusts the deemed

K-factor collection rate from 95% to reect the actual

collection rate of the NWC for the applicable month.

The Commission argued that given the current

environment within which it operates, it is unable to

consistently achieve such a high collection rate.

The Oce will provide the Commission with a response

before the end of the rst quarter of 2011.

Small Private and Commercial Potable ater and

Sewerage Service Providers

There are currently, six (6) licensed small water providers

in Jamaica. They are as follows:

Four Rivers Development Company

Runaway Bay Water Company

Dairy Spring Limited

Can Cara Development Company

Dynamic Environmental

Management Limited

Hampstead Benevolent Society

Of these small water providers, only two (2) are

licensed sewerage service providers namely, Can Cara

Development Company and Dynamic Environmental

Management Limited. In addition to these two

companies, Rose Hall Utilities Company also has a

sewerage service licence but does not have a licence

for potable water. The company however obtained a

licence from the National Environment and Planning

Agency (NEPA) for the provision of water for irrigation

purposes.

Runaway Bay ater Company

The Runaway Bay Water Company (RBWC) had an

annual Price Adjustment Mechanism applied to its

rates for the year 2010/2011. This is in keeping with the

Determination Notice issued by the Oce where the

RBWC rate adjustments are tied to that of the NWC.

Rose Hall Utilities Company Limited

Rose Hall Utilities Company Limited (RHUCL) is a

licensed sewerage service provider located in RoseHall St. James. The company applied to the Oce for

an increase of its sewerage rates and also requested

that the Oce consider the possibility of developing a

methodology to price re-claimed water.

The OUR is currently consulting with the National

Environment and Planning Agency (NEPA) and the

Ministry of Health to determine how the selling of

reclaimed water can be accommodated.

** Note that the latest NWC expenditure report on the K-Factor programme is up to the period ending October 2010.

Table 8: K-Factor Project Approvals & Expenditure (Summary)

May 2008 - Oct 2010**



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

Irrigation ater

The National Irrigation Commission (NIC) developed

the National Irrigation Development Plan (NIDP) in an

eort to improve the eciency of water provisioning

to its various schemes. Additionally, the NIDP also

serves to foster the independence of these schemes

to enable them to eventually become Water User

Associations. In 2010 the NIC made an application to

the Oce for a rate to be charged to the customers of

the Hounslow scheme. The application was examined

and a Determination was issued on October 19, 2010. That Determination also included the imposition of

Guaranteed Standards similar to those applied to the

other irrigation schemes.

Sewage Treatment

The NWC remains the main operator of sewage

treatment facilities. The major challenge facing the NWC

is the modernisation of some of its older facilities to

meet the requirements of the National Environmental

and Planning Agency (NEPA).

The NWC has started the rehabilitation work onsome of these facilities using funds from the K-factor

programme.

TRANSPORTATION

The Oces main activity in the

transportation sector remains one of

providing advice to the Minister of

Transport for the setting of bus and taxi

fares. The legislation to bring the transport

sector under the OURs regulatory remit is

still pending.

There were however no major activities in

the transportation sector which required the

OURs attention for the calendar year 2010.

ADMINISTRATION/HUMAN RESOURCES

The OUR reported a number of vacancies at the end

of 2009/2010 and lamented its inability to ll these

positions. Thankfully, despite the continued constraint

on its ability to make competitive oers, the OUR was

able to attract a number of new professionals during

the review period and was also able to retain the

complement with which it started the year. This has

served to strengthen the team and it is hoped thatsome exibility will be allowed in the upcoming year to

ensure that the organisation is able to oer the kind of

incentives that will allow it

to retain the skill set that

is so critical to match

those of the regulated

entities and local and

international peers with

which it has to compete.

With the OUR listed as

one of the twelve publicentities to be accorded

full devolution and

de-concentration of

authority, a

considerable amount of attention

was devoted during the year to

preparation for this status. There were

on-going engagements with the Public

Sector Transformation Unit and otheragencies to develop a Management

Accountability Framework to ensure

transparency and accountability. This

will become binding on the OUR as soon

as there is sign o on devolution.

...it is hoped that

some exibility

will be allowed in

the upcoming year

to ensure that the

organisation is able

to oer the kind of

incentives that willallow it to retain the

skill set that is so

critical.

As in previous years,

great emphasis

was placed on

sta training and

development,

funded mainly from

the organisations

budget.


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A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1


As in previous years, great emphasis was placed on sta

training and development, funded mainly from the

organisations budget, but also with grants from agencies such

as the Inter-American Development Bank, (IDB), through

the Multi-lateral Investment Fund (MIF) Programme, as

well as from membership benets from payments to

the Commonwealth Telecommunications Organization,

(CTO). Topics such as Electricity Law and Natural Gas,

Internet Governance, Project Management, Alternate

Dispute Resolution, Document Management, Public

Speaking, Best Practices in Public Procurement and

Renewable Wave Energy Technologies are some of theareas that were covered. Arrangements were also made

during the year to provide all members of sta with

training in the use of Microsoft Oce Suite applications.

This reects the OURs determination to ensure that

its sta makes the best use of the advantages that

are aorded by Information Technology to improve

the value and timeliness of service delivered to the

public. In addition to these formal assemblies, monthly

meet and learn sessions were held where, among

other things, the general sta body was kept abreast

of regulatory issues, by way of having authors of

Consultative Documents making informal power-pointpresentations to peers.

Also during the review period the OUR signed a

Memorandum of Understanding (MOU) with the

Nigerian Electricity Regulatory Commission (NERC).

This will facilitate a mechanism for mutual co-operation

between both entities.

The tradition of information exchange with other

regulatory agencies continued during the year. Sta

members from the Nigerian Electricity Regulatory

Commission and the Utilities Regulation andCompetition Authority in the Bahamas were hosted

during the year. These visits continue to underscore the

esteem in which the OUR is held by its regulatory peers.

Corporate social responsibility constitutes one of

the organisations core values. During the year,

assistance was given to the Glenhope Place of Safety

in the refurbishing of two dorms. The organisation also

partnered with the Engineering Department of the

University of Technology in providing the opportunity

for work-integrated learning/internship for students

pursuing studies in the engineering discipline.

With regard to Procurement of Goods and Services,

the Administration/HR Department continues to

ensure that the organisation is fully compliant with the

Governments Procurement Guidelines. Notably the

OUR has, on more than one occasion, been commendedby the Oce of the Contractor General (OCG), for its

consistently prompt submissions and responses to the

requirements of that Oce.

KEY PERFORMANCE INDICATORS KPI

As part of eorts to enhance transparency and

accountability the OUR has embarked on a value for

money exercise as well as a KPI project. These initiatives

will allow stakeholders to measure the performance ofthe OUR against set KPIs.

Additionally regional regulators through the

Organisation of Caribbean Utility Regulators (OOCUR)

have agreed in principle to the need to benchmark

individual performances.

Some of the KPIs already agreed are acknowledgement

of all correspondence within three (3) business

days, publication of the Annual Report and nancial

statements within one hundred (100) calendar days

of the end of the nancial year, issuing a decision on atari submission within ninety (90) days and concluding

investigations within thirty (30) business days.

Other KPIs related to regulatory decision making,

nances and training are being developed and it is

expected that with the assistance of the Public Sector

Transformation Unit (PSTU) these will be nalised and

published in the 2011/2012 nancial year.



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

Compensationfor

SeniorSta(2010-2011)

Notes:

1

Directexpensesofassignedmotorvehicle

2

MotorVehicleUpkeepAllowance

3

Pensionbenetonly

4

Clothingallowance

5

Healthandgrouplifeinsuranceisincludedundernon-cashbenets.


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The OUR will aim to

assist in achieving

the Vision 2030 Plan

by ensuring thatits regulation of

the various utilities

seeks to align private

behaviour with the

public interest.

Outlook & ork Programmefor Fiscal 2011/12

The outlook for 2011 will be driven by the OURs

mandate as well as the Governments Vision 2030 Plan.

The OUR has dened the Policies and Programmes

objectives in the following terms:

To establish and maintain transparent,

consistent and objective rules and standards

to regulate the providers of specied utilityservices while fully protecting the public

interest;

To enhance ecient utility operations and

provide an enabling environment conducive

to investments;

Analytical capacity ensuring high quality

policy options, programme design and

advice to the government; and

To align regulations, directives and

processes with legislation

and policy mandate.

The OUR will aim to assist

in achieving the Vision

2030 Plan by ensuring

that its regulation of the

various utilities seeks to

align private behaviour

with the public interest.

Success in achieving the

set objectives and goals

and accomplishing the

programme of work isdependent however,

on the extent to which the

following assumptions hold true.

Sta turnover will be kept to a minimum.

This is critical given the elongated

learning curve that obtains for regulatory

professionals;

Sta will be operating at optimal output

throughout the period of the plan;

Anticipated policy changes and the

timetables for expected legislative

enactments and amendments materialise;

The enforcement powers of the OUR are

enhanced;

Such emergencies as arise will not be

beyond the Oces ability to adapt and tooutsource;

The regulatory environment will at the least

not become more litigious;

The existing institutional compliment and

responsibilities are maintained or where

there are amendments the institution is

provided with the required notice and

resources to make adjustments.

Telecommunications

For information, communication and tele-

communication services, the imperative is to deploy

broadband to benet all citizens, including those

with disabilities and to str engthen competition in

the various markets. Some of the more important

objectives determined by the Oce for achievement

within the planned p eriod are:

Conduct a broadband baseline data survey,

the ndings of which will inform the

development of a new Universal Service/

Access Policy.

Complete work on the proposed

automated number administration system

for managing and allocating toll free

numbers. This will allow for improved

operational eciencies in number

management and administration.



A n n u A l R e p o R t 2 0 1 0 - 2 0 1 1

Reconciliation of various mobile Reference

Interconnection Oers (RIOs) in order to

develop a standard RIO;

Development of a Long Run Incremental

Cost (LRIC) model for mobile networks to

ensure rates are developed on a cost basis

using competitive indices.

Electricity

For electricity, the objective is to lower real costswhile improving reliability, quality and eciency

without compromising the environment. The work

programme therefore reects the imperatives of

procuring additional capacity at least economic cost

and that system losses and other eciency factors are

improved over the period. As a critical corollary, the

OUR will continue to make representations to secure

the competitive procurement of fuel for the sector and

the adoption of a transparent index for reference prices.

Within the parameters of Governments stated policy

objectives, developments with respect to the sector

and the existing regulatory framework, the major goals

identied for the period are:

Laying the basis for breaking the cycle of

crisis addition to generation capacity with

the procurement over the next ve years of

some 480 MW of new generating capacity

(replacement and additional);

Creation and maintenance of an investment

environment that is facilitative of

competitive addition of least economic cost

generation; Creating and enforcing a system of

incentives designed to reduce electricity

losses;

Intensify monitoring and surveillance of all

licencees within the electricity sector

Building institutional capacity as a

contingency for regulation of fuel

procurement and of a Natural Gas sector in

the event of its emergence.

ater and Sewerage

For water and sewerage, the focus is to provide access

to aordable potable water and to sewerage services.

An important element of this is to reduce non-revenue

water and improve eciencies in the delivery process(by improving the infrastructure). The main goals for

this sector are:

Facilitating increased access to potable water

and sewerage services in keeping with the

objective of universal access to potable

water;

Fostering measurable improvements

in service delivery with respect to the

availability and reliability of potable water

and sewerage services.

Enforcement of the K Factor regime forimproving eciency of the water sector.

Transport

The OUR will again be seeking to have the regulatory

framework in place to allow it to fully regulate economic

aspects of the Transport sector. Currently, the OUR

conducts the analysis of proposed tari changes and

makes its recommendation to the Ministry.

As we have not