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JPS loses appeal to have customers cover $4.27b in back pay to employees

Sunday, July 16, 2017

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KINGSTON, Jamaica — A Jamaica Public Service Company (JPSCo) appeal, which the Office of Utilities Regulation (OUR) is framing as an attempt to recover from its customers billions of dollars in back pay that was paid out to JPS employees, has been dismissed by the nation's final appellate court, the Privy Council.

The OUR, in a release today, said JPS was seeking to regain money it paid out in a reclassification exercise in 2008. According to the release, "had it been successful in its appeal to the Privy Council, customers would have had to repay the $4.27 billion plus interest from 2010 to 2017 at a rate of 12.56 per cent (JPS’ cost of debt in 2010)".

The OUR said it estimates that the total amount on this basis would have been $9.78 billion to date.

According to the regulators, in March 2009, JPS filed a claim, seeking approval to recover $4.27 billion incurred for salary payments to employees and related taxes, by way of a tariff adjustment using the Z-factor provision in its licence. JPS asserted that the claim fell within the Z-factor provision because it resulted from factors that were outside of managerial control, and to deny the recovery of such costs would be to unfairly penalise the company.

The OUR denied the claim.

Appeals to the All-island Electricity Appeal Tribunal, the Supreme Court, and the Court of Appeal were all decided in OUR's favour.

The final appellate court has also sided with the decision of the oversight agency, after arguments were made on its behalf by Dr Lloyd Barnett and Ms Annaliesa Lindsay, despite taking issue with the definition of both sides of the term 'managerial decisions' in the Z-factor provision.

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