The Governing Board of the Electricity Company of Ghana (ECG) is contesting the Gh¢5,868, 000 fine imposed on them by the Public Utilities Regulatory Commission (PURC), a body regulating electricity and water utilities in the Republic of Ghana.
The Board mounted a spirited rejection of the fine in a statement issued by their lawyers, S.K. Boafo&Co.
The lawyers contended that the PURC overstepped its bounds by targeting the board members.
They argued that the Commission’s legal mandate allows it to impose fines on the company itself (ECG) as a public utility, not on its board members.
The lawyers argued further that since the board members are not directly involved in the day-to-day operations, they cannot be held responsible for the company’s actions.
“It is patently clear that under the said provision, the Commission can only impose a regulatory charge on a public utility. The Commission does not have the power/authority to purport to impose any regulatory charge on officers of the public utility.
“The Commission in purporting to impose the said regulatory charges on the Board Members of ECG exceeded their jurisdiction as it is not within their powers/authority to do so.
“It must also be stated that the Electricity Company of Ghana Limited as a corporate body has a legal personality that is distinct from its Board Members. This is the very foundation of Company Law. The officers of the company cannot be held liable for the acts of the company.
“Lifting the veil of incorporation to go after the officers of the company can only be done in exceptional cases and can only done by a court of competent jurisdiction.
“The Commission’s lack of jurisdiction, power and/or authority to lift the veil of incorporation in the instant matter to purport to impose regulatory charges personally on the Board Members of ECG is strengthened by the provisions of Sections 38 & 42 of The Public Utilities Regulatory Commission Act, Act 538,1997.
“The Commission’s basis for holding the Board Members personally liable is because “These Board Members were at all material times responsible for providing strategic direction to ensure the provision of safe, adequate, efficient, reasonable and non-discriminatory service to consumers.
“As stated above, under Section 38 of Act 538 a default on the part of a public utility in the payment of a penalty may lead to the personal liability of a principal officer of the public utility. Under Section 49 of Act 538, a principal officer is the person responsible for the day-to-day administration of the affairs of the public utility.
“Board members of ECG are not responsible for the day-to-day administration of ECG and, therefore, are not principal officers within the intendment of Act 538 to be able to be held liable for a default on the part of the public utility ECG.
“The Commission’s Order imposing regulatory charges on the members of the Boards is unlawful, null and void as same is without jurisdiction. By this Order, the Commission has unlawfully clothed itself with the powers of the High Court, and imposed a sentence on the Board Members, without having been allowed to be heard which amounts to a breach of the rules of natural justice. Our clients, therefore, reject the contents of the regulatory order relative to any personal liability on their part,” the lawyers contended.
Background
It would be recalled that the regulator made three requests to the ECG with the timelines of March 25, March 27, and April 2, 2024.
The request from ECG by PURC followed the anger from the public demanding that ECG issue a load-shedding timetable for them to know when they would have power to plan due to power outages.
The information requested related to the tariff revenue allocation under the Cash Waterfall Mechanism (CWM), the provision of regulatory audit data and the submission of information related to operational matters, as well as the provision of other regulatory audit data.
ECG responded to the Commission’s request.
However, the PURC letter said, “The Commission established from its analysis of data submitted by ECG that there were 4142 outages to consumers within ECG’s operational areas between January and March 2024. Out of this number, 165, representing 3.98 per cent of the total outages, were ECG-planned outages.
“Further analysis showed that of the 165 ECG planned outages, 40 were supported by public notices, while there were no notices for the remaining 125 outages.
“Further, 38 of the 40 notices did not comply with the requisite three-day statutory notice prescribed under Regulation 39 of L.I. 2413.
“This indicates that in 163 instances of planned outages, ECG did not comply with the law.”
Each of the nine-member board of ECG including the Managing Director, is to pay about GH¢652,000 per a calculation by this portal.
The fine was originally slapped on ECG, but the Commission, in a letter, explained that it could not allow the company to bear the cost due to the nature of its business and the likely impact on service delivery.
It thus passed on the fine to the company’s board members which failed to provide strategic direction to ensure the provision of safe, adequate, efficient, reasonable and non-discriminatory service to consumers.
“For failure to comply with the three-day statutory notice on notification and publication of planned outages required under Regulation 39 of L.I. 2413, the Commission by Regulation 45 of L.I. 2413, also imposed a regulatory charge of 3,000 penalty units on ECG for each of the 163 breaches, amounting to GH¢ 5,868,000.”
“The Commission has determined that having regard to the nature of ECG’s ownership and business, the imposition of the penalty of GH¢5,868,000 on ECG would be counterproductive, as payment from ECG’s revenue would have a rebounding adverse effect on quality of service and consumers who pay tariffs to the company.
“For that reason, in the interest of justice and to protect the interests of consumers, the Commission shall hold the Board Members of ECG who were in office from 1 January to 18 March 2024 liable for the payment of the GH¢5,868,000,” a portion of the letter said.
Source: https://energynewsafrica.com