Letters to the Editor
August 23, 1999
How Public Utilities Commissions function in the USA
Below is an outline of a typical rate case procedure available to New York State consumers for their information. The outline could provide a basis for your readers to compare the role of the PUC in Guyana to the typical regulatory body in the USA.
A litigated case takes about 11 months to be decided, but the time frame for a negotiated settlement is usually shorter. The PUC is a body of five Commissioners recommended by the Governor and confirmed by the State Senate for a fixed term. The Chairman is appointed by the Governor and is selected from the body of Commissioners. However, in some States, the Chairman is elected for a fixed term in State elections. The main function of the PUC is to regulate monopoly utilities (electric, gas, telephone, water and cable) so that consumers have reliable service at the lowest reasonable rates.
In your July 30, 1999 edition it was reported that "De Santos in his presentation pointed out that Nadir had a misconception about the role of a PUC. He explained that the role of a PUC was not to set policy but to balance, in an even-handed way, the interests of the public utility, the consumer and the government, once a contract had been entered into between the utility and the government." This statement brought laughter from my colleagues. For Mr. De Santos information, the PUCs in the United Sates do set policies. Moreover, the Commissions are supposed to be free from political influence and should not be bound by dictates from the government in power. The Commissions are bound by laws which are passed by the State Legislature. However, it is not uncommon to find a Chairman who is appointed by the Governor to be favourable to the Governor's policies.
The rate case process is as follows:
Costs to a Utility to do business rise. For example, taxes and wages go up.
The Utility decides it needs to increase rates to cover those higher costs.
The Utility files a rate increase with the PUC. The request includes its proposed new rates and the Utility's justification for the increase. Usually, a cost of service study is filed with the rate case. The cost of service study is either an embedded cost of service study or a marginal cost of service study, or both. Usually customer impacts in the form of bill tables are also provided with the request for rate increase.
(a) A PUC staff team, including a lawyer, accountant, engineer, financial analyst and consumer service specialist is assembled to investigate the Utility's proposal. They will develop a counter proposal.
An Administrative Law Judge is assigned to preside over the case, hear all the evidence and recommend a decision to the PUC.
Any interested person or group can participate in the case in two ways: (a) by becoming an "intervenor". Intervenors are active throughout the process. They examine the Utility's proposal, submit testimony and cross examine other witnesses and participate in any negotiations. (b) by submitting comments. Public Statement Hearings are held so that interested people can comment directly to the Judge. Anyone can also write to the Judge with comments. These comments are considered by the PUC staff, the Judge and the PUC itself.
The Judge holds Public Statement Hearings to receive public comment on the Utility's proposal.
Staff , the Utility and other parties may either litigate the issues raised by the Utility's proposal or may negotiate a solution.
(a) Under Litigation: The Judge conducts "evidentary hearings". These hearings are conducted like a trial. The Utility's needs for the rate increase and individual cost items (e.g. fuel, construction budget) that make up the total rate increase request are examined. Staff, the Utility and other intervenors submit testimony, cross examine each other's witnesses and submit briefs to the Judge.
Under Negotiations: All interested parties meet in informal sessions to discuss the issues in the case, the need for an increase and any other issues. They negotiate any differences in their positions. If agreement is not reached, the parties will litigate the case. If agreement is reached the terms of the agreement are made public. The Judge will accept comments on the terms of the agreement. If necessary, the Judge will hold public statement hearings or evidentiary hearing on the agreement. The agreement must be approved by the PUC.
The Judge issues a public document called the "Recommended Decision" which summarizes each party's position on each issue in the case and presents the Judge's opinion if rates should increase and by how much.
Staff, the Utility and other intervenors submit written comments on the Judge's decision.
The Judge examines these comments and provides an analysis of them to the PUC.
The PUC decides the case at a public meeting. It can reject, modify or approve the request for an increase. A written decision called an Opinion and Order is issued.
Parties can appeal the decision to the PUC and may seek court review of the decision if the appeal fails.
President Jagdeo must appoint dynamic new ministers
Let me take this opportunity to congratulate Mr Jagdeo on his elevation to the presidency. I only hope he can take Guyana out from its present slump to prosperity.
But President Jagdeo alone cannot take Guyana forward, he needs to be complemented by a top quality cabinet and the support of the Guyanese people.
I suggest he start by appointing a reputable Guyanese economist as Minister of Finance. At present I support the appointment of Dr. Ganga for this post. The Ministry of Trade and Industry also needs a dynamic minister, who can grapple with the fact that Guyana must urgently pursue a path of industrialisation to add value to the abundant source of raw materials the country possesses. I know getting rid of several of the incompetents in the present PPP cabinet will be difficult, but there can be no excuse for not appointing reputable candidates to fill these positions.
The post of Governor at the Central Bank is another critical position that must be filled. As Minister of Finance President Jagdeo failed to appoint someone for this position, especially while the exchange rate was sliding. This was one of his main failures as Finance Minister. You just cannot have an acting Governor for so long at the helm of the Central Bank in an economy that is as open as Guyana's.
Some time ago the World Bank estimated that should Guyana continue to grow at an annual rate of 6 per cent the per capita income will treble in six years. This must be his goal as president. Nothing less than 7 per cent annual growth must be tolerated given Guyana's resource endowment. For this he needs the best and brightest cabinet. Good luck!
President Jagdeo needs the full co-operation of the party stalwarts
The reality of the genesis of the pre-election principle of the "A Team" which carried the PPP/Civic to victory is now history.
President Bharrat Jagdeo, most of all, now confronts that reality, a reality that no one in December 1997 expected or seriously anticipated.
Systems, procedures, policy and adherence to the teachings of the founding leader, are all impacting upon the principal players involved in ensuring a smooth and uneventful assumption to the highest position in the country by their comrade Jagdeo.
The success which the party desires for the newest President can only be achieved by the unrestrained and fullest co-operation of the longer standing proven party stalwarts. Guidance must be solicited from the close comrades with proven ability and long experience in the political development of the party.
A conscientious review of the performance, competence, efficiency and dedication is expected to be embarked upon, in determining a new look Cabinet. In this regard, the filling of ministerial responsibilities and the choice of maybe two high calibre I, personalities, will go a long way in enhancing the new President's stature. It cannot be over-emphasised the importance of relying upon proven ability with a good track record, and it must be assumed that input from long standing party stalwarts will be sought in finally deciding upon the best candidates.
The huge responsibilities of running this country cannot be left to one person, it is the strength of the other members that comprise the team, and those that finally make it to Cabinet that will greatly assist the President.
It may also be a propitious time to adumbrate aspects of the philosophy which guide the thinking of the government as it affects the approach to the diverse developmental thrusts. There are several priorities and urgent matters which must be given attention, and as in every situation an appreciation of the philosophy or thinking of the government will clarify and crystalise any impediments to decision making.
The President, the party with its civic component must continue the good work started in 1992; the majority of the people of this country are appreciative of your efforts.
David de Groot
Lines but no phones at Houston
For four months GT&T has put in place telephone lines in order to provide the citizens of Houston with telephone service. The same thing has happened in other villages along the East Bank for more than four months. I can remember employees of GT&T telling us, while commissioning the lines, that we will have telephones in three weeks. But telephone service continues to be as elusive now as when Houston had no telephone lines.
Are the telephone wire and poles for style? I can remember some of the chaps saying they are souvenirs. I cannot understand why the telephone company would expend all that money, time and manpower to commission the lines yet not provide telephone service. I can now understand why the company keeps harping that its return on investment is not what was expected. I think we deserve an explanation. Also, I urge the PUC to take note.
Houston is one of Guyana's most neglected spots. No drains were dug or streets repaired for 18 years. Craters grace the streets and bush the parapets. The place is easily flooded with minimal rainfall, so one can imagine what happened recently with ll.5 inches of rainfall in two days. I know the plea for better streets and drains in Houston will fall on deaf ears since Houston has always been a faithful vote bank. However, I am expecting better from GT&T since I have faith in private enterprise.
President Jagdeo must prove himself
The heading you gave to my letter in SN 99-08-13, which dealt with the appointment of Mr. Jagdeo as President, misrepresented the focus of the letter, not surprisingly, provoked a disclaimer from James McAllister. I therefore would be grateful if you could publish this clarification.
The reality is that the PPP is the government and only a ruling of the courts can change that. I therefore argued that while Mr. Jagdeo and the PPP administration should expect from public servants professionalism and discipline, they must not demand political loyalty from these workers.
I called in my letter for all political forces to engage the President in a meaningful way to improve the political and economic climate and to charter a new course for Guyana. However, I wish to add that the new President would also have to demonstrate his commitment to change and his desire to fashion a new political culture in Guyana. In short Mr. Jagdeo must be more than a mere young face if he wishes to bring renewed hope for Guyana. Where better for him and the PNC to start than with the inter-party dialogue?
For the record, I remain committed to serve the people of Guyana regardless of my personal political views.
J. McAllister -Japan
United we grow
With regards to the letter by Sheila Holder (18.8.99) please be advised that I have been a financial member of the Guyana Consumers Association since April 28, 1998.
Furthermore, I have never been the chauffeur for the Minister of Information.
I joined the Consumers Association because there is an urgent need for a strong organisation to represent the interests of all consumers in our country.
I look forward to working with the new Executive and all members of the Association to achieve this goal.
United we grow, divided we wither!
Guyana Consumers Association
Will the President continue to act as Minister of Finance?
At his first official outing as President, Mr. Jagdeo indicated to the people of Leonora that because of pressing duties of state he could not have visited when he was Minister of Finance.
Indications are that he intends to continue performing the functions of Minister of Finance. I am at a loss to reconcile his statement with his desire. If he could not visit as Minister of Finance, how could he visit as President and Minister of Finance.
Something will suffer. And my guess is the ministry of finance. We all know that once something gets into the Ministry of Finance it takes forever to get out. Imagine what will happen now and what about next year's budget. It should start already.
We all want to wish the President well and we all want to give him a chance. But the President also has to be reasonable and respect people's reasonable expectations. At the least he should explain to the people why he wants to retain the position of Minister of Finance when constitutionally he cannot sit in Parliament and physically it seems an impossible task.
Passing the torch
As another page in Guyana's history is opened, we must never forget the contributions made by Burnham, Rodney, the Jagans and Hoyte. Though we have had some dark periods I do believe that our history is illustrious enough to find a place in our schools curriculum.
In this ever evolving world, nothing remains the same, change is inevitable. We must accept it, we must understand.
The recent passing of the torch of leadership and responsibility to young Bharrat Jagdeo is an indelible signature on the pages of our history. The People's National Congress should emulate this, since these two major parties have dominated our political scenario for decades. Both parties must understand each other's steps and be able to counter.
Mr Hoyte should therefore pass the torch of his party's leadership and responsibility to Aubrey Norton who is young, intelligent, vibrant and understands politics.
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