Latest update March 28th, 2024 12:59 AM
Sep 09, 2014 Letters
DEAR EDITOR,
It was with some amount of pleasure I read in your publication of Saturday August 30, 2014 that the Public Utilities Commission (PUC) began public hearings on GT&T’s rate rebalancing application. Review and rebalancing of GT&T’s rates have been long overdue, but it is timely now that the Government is moving to completely liberalize the telecommunications sector. What I want to do here is to make some comments on GT&T’s submission and to implore the Commission to do proper due diligence before granting any new rates.
I read the submission by GT&T and agree with the exclusions mandated by the Commission from GT&T’s cost of service. At this time, the Commission needs to see whether there are other costs that do not directly or indirectly impact GT&T’s ability to provide its service to its customers. After all, GT&T is there to serve its customers, and only those costs that are incurred to provide that service should be recognized in making new rates for the company. This will certainly call for intense scrutiny of their costs by professionals who are trained to do so. One hopes the Commission has this capacity among its current staff.
According to GT&T’s submission “Section 6 (9) (b) of the Purchase Agreement stipulates that GT&T is guaranteed a minimum 15 percent rate of return on capital dedicated to public use.” Two observations I would like to make about this provision.
Firstly, the PUC should calculate GT&T’s weighted average cost of capital to see whether it is greater or less than the guaranteed 15 percent. If it is greater, then the public would benefit by restricting GT&T to the guaranteed minimum. If it is less, the PUC will have some idea of the extent to which GT&T is benefitting at the expense of the consumers. This is useful information for the PUC to have as it moves forward with its hearings.
Secondly, the Commission should spare no effort in determining the assets “dedicated to public use”. In regulatory parlance, assets dedicated to public use find themselves in the asset base upon which the return should be given. To arrive at such an asset base, the PUC should apply the principle of used and useful, to determine what assets should be included. Those which are not now being used to provide service to the consumers and will not be used over a defined period (to be set by the Commission) should not find themselves in the asset base.
Mr. Leonard Craig in his submission to the Commission, at its last hearing, pointed out that GT&T is using only some features of its installed systems while depriving the Guyanese consumers of other telephone services that can be derived from the installed capacity. If that is so, the PUC will have worked a hardship on the consumers if it grants rates to GT&T for the unused capacity. Similarly, assets that are lying idle and not being used for the benefit of the consumers, and will not be used within the defined period, should not be allowed in the asset base. Some examples can be land, building, cables, other stores etc.
It seems that the Commission has a lot of discoveries to make, and the big question is whether it now has the professional capacity to make such discoveries. If it does not, I would advise that it engages a Telecommunications Engineer to assist in the process.
Finally, I am not aware that the PUC ever ordered a depreciation study of the assets of GT&T. With the pace at which technological developments in the telecommunications sector are moving, it would have been wise for the Commission to have ordered such a study. While it may be too late to do so now to impact this rate making, it would be useful for the Commission to so order.
Lancelot McCaskey
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
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