FTC invokes special clause blocking post-Elsa compensation for utility customers

Electricity, water and telecom customers will be unable to claim compensation from the utility companies, the regulator has said.

The Fair Trading Commission announced that Light & Power Company (BL&P), the Water Authority (BWA) and FLOW are exempt from compensating residents under the Standards of Service provision, owing to “force majeure” – the legal definition of exceptional and unforeseen circumstances that prevent the fulfillment of a contract.

Following the passage of Hurricane Elsa, customers were left without electricity, resulting in them having to dump several items from their refrigerators and freezers. Some households are still without electricity and water a week later.

But in a statement late Thursday, the FTC said the utility companies qualified for an exemption from the Standards of Service due to breaches in service being caused by conditions outside the utilities’ control.

“This type of condition is referred to as ‘Force Majeure’,” said the FTC in a statement that quoted the 2009 edition of Black’s Law Dictionary.

“Force Majeure [is] an event or effect that can be neither anticipated nor controlled; especially an unexpected event that prevents someone from doing or completing something that he or she had agreed or officially planned to do. The term includes both acts of nature (example, floods and hurricanes) and acts of people (example, riot, strikes and wars)’.”

The FTC regulates the Quality of Service (QoS) provided by the major utility service providers, the BL&P, the BWA and Cable & Wireless which owns FLOW under a Standards of Service framework.

This framework sets minimum standards of service provision. It provides for either compensation for individual customers or penalties in some cases where those standards are breached.

The FTC added: “It is not necessarily automatic that the standards are held in abeyance simply in the presence of a Force Majeure event or condition. Reliance on Force Majeure, requires that the service provider proves that the situation rendered meeting the Standards impossible.

“However, in the case of the passage of a hurricane, as with Elsa, it would be reasonable to expect that Force Majeure would apply and as such the affected utilities would be exempt from the requirements to pay compensation under the Standards of Service.”

But the regulator warned that the utilities still had a duty to restore service in the “shortest possible timeframe”.

“This exemption notwithstanding, the service providers are not allowed free reign and are still expected to restore service within the shortest possible timeframe,” it said.

It is estimated that just under than 9,500 households remain without electricity a week after the passage of the category one hurricane. It is anticipated that all customers will be connected within another week.

(MM)