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CLP Power to tap methane from Tuen Mun landfill for electricity

The company is awaiting an environmental approval for its plan to build generators on the site; project will cost “more than HK$100 million”

The larger of the city’s two electricity providers will seek approval for the installation of 14-megawatt electricity generating units powered by gas at a Tuen Mun landfill to expand its portfolio of “renewable” energy projects.

CLP Power managing director Paul Poon Wai-yin said the large amounts of flammable gases such as methane, produced from the decomposition of municipal waste, could be tapped for power.

About 7,300 tonnes of such waste is dumped in the landfill at the tip of Nim Wan daily.

Poon said the waste-to-energy conversion was a better source of renewable energy than solar or wind, which required massive amounts of land and investment, adding:

“On one hand it will help reduce [greenhouse gas] ¬emissions from landfills, and on the other, help replace the burning of fossil fuels to generate electricity.”

Quince Chong Wai-yan, head of corporate development, said the new facility – estimated to cost “more than HK$100 million” – would have a minimal impact on tariffs due to its limited scale.

The project’s first phase comprises five units capable of generating enough electricity to power 17,000 four-person households for one year. A second phase will add two more units to the site.

A new climate change action plan released by the government last week set new emissions reduction targets for 2030. Authorities hope to achieve this by moving away from coal-fired power generation to natural gas and non-fossil fuels.

While the plan stopped short of a target for renewables, it highlighted a “3 to 4 per cent” capacity, to be realised between now till 2030. Poon said CLP was already on the way to help meet 1 per cent of this mark.

He stressed that the phasing out of CLP’s coal-fired units over the next decade would also be discussed with the government in negotiations for a post-2018 regulatory framework, expected to be completed by the end of the administration’s term.

Greenpeace senior campaigner Frances Yeung Hoi-shan said the facility would help reduce methane emissions, a more potent greenhouse gas than carbon dioxide. But she said most green groups did not consider processed waste a “renewable energy” source. Yeung urged the government to require power companies to incentivise investments in sources such as solar and wind energy in the new regulatory framework.

The new action plan stated that tariffs and renewable energy certificates will be introduced as incentives in negotiations with CLP Power and HK Electric. But Poon did not provide details at a media briefing on Wednesday.

Impact assessments for CLP’s proposed units at the landfill have been completed and the company will apply for an environmental permit shortly. It hopes to begin operations of the first phase in the third quarter next year.

The Environmental Protection Department welcomed the project and said it would facilitate implementation.

Hong Kong electric company plans floating LNG terminal near Soko Islands

CLP Power says project will open city up to additional source of gas supply and help meet post-2020 fuel mix requirements

CLP Power is eyeing the eastern waters of the Soko Islands, off southern Lantau, for a floating liquefied natural gas (LNG) terminal that will enable it to tap more gas from international markets.

This will come nearly a decade after it shelved a land-based version of the project in the southern Sokos despite government approval. A 25-year gas deal with the mainland was signed instead.

The project will help it meet new requirements for half of the city’s electricity needs to come from natural gas after 2020.

CLP, which supplies Lantau, Kowloon and the New Territories, remains tight-lipped on details such as costs and tariff implications, but said the facility would provide the city with additional sources of gas at more competitive market prices and spread out price risks.

CLP’s gas is now piped from Central Asia via the Second West-East Gas Pipeline as part of the contract with the mainland and from the depleting Yacheng gas field near Hainan. As a result,it has little bargaining power over prices.

HK Electric, which supplies Hong Kong and Lamma, obtains Australian and Qatari gas via an LNG receiving terminal in Dapeng, Shenzhen.

“If we don’t have another source…we will have to continue to buy gas from the mainland and our bargaining power will remain weak,” said CLP senior director Edward Chiu On-tin.

The offshore facility, spanning less than a hectare in size, will likely handle about 30 to 50 carriers a year. LNG transferred to the terminal will be converted back into gas and piped to Black Point Power Station in Tuen Mun for use in power generation.

While 22 such terminals are already in operation worldwide, Chiu admitted such a project would be first for Hong Kong. “We will have to consult the Town Planning Board and the Marine Department” on planning and regulation matters, Chiu said.

The company will be submitting a project brief to the Environmental Protection Department in due course.

From there, an environmental impact assessment will be conducted, which will address issues such as impacts on the planned Soko Islands and Southwest Lantau marine parks. Chiu expected “temporary impacts” during the construction phase, but did not foresee any major ecological harm in the long-run as no land reclamation was required.

Dolphin Conservation Society chairman Dr Samuel Hung Ka-yiu said the project did indeed have a smaller footprint than the original land-based project, but posed the same environmental challenges.

“The main facility is located in key habitat used by the finless porpoise and undersea gas pipes are likely to pass through other marine parks around Lantau.”

WWF-Hong Kong’s Samantha Lee mei-wah said regasification – a process which involves pumping seawater to heat the LNG back into gas form – could disrupt fisheries. “This freezing water is discharged and the sudden reduction in seawater temperatures can harm marine life,” she said.

CLP says other locations are being considered, but the waters east of the Soko Islands will remain a “high priority” option.

Energy Advisory Committee member Dr William Yu Yuen-ping said the facility would provide Hong Kong with cheaper gas, but would likely be an expensive fixed asset with a long payback period.

The Environment Bureau said it would review the plan upon receiving CLP’s project proposal.
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Hong Kong’s two electricity suppliers can afford to be more generous with tariff cuts

Fuel prices have plunged in the past year, yet CLP and HK Electric are only reluctantly offering a 1 per cent cut in power bills

Millions of households and businesses are understandably dismayed by the announcement on Tuesday that the city’s electricity suppliers, CLP and HK Electric, will cut tariffs by a miserly 1 per cent despite the dramatic fall in fuel prices over the past year. With the two power companies still making billions of dollars in profits each year, the tariff reductions are little more than a drop in the ocean.

Equally disappointing is the government’s failure to defend consumers’ interests. Speaking at the Legislative Council economic development panel on Tuesday, Secretary for the Environment Wong Kam-sing revealed that the two companies originally only intended to freeze their tariffs. The reductions, 0.9 per cent for CLP customers and 1.1 per cent for HK Electric clients, only came after the government intervened. It is regrettable that Wong considered the outcome acceptable. He let down those who legitimately expected steeper concessions.

To those who have become used to ever-increasing energy bills in recent years, the cuts, albeit modest, are a small step in the right direction. According to the companies, the tariff levels are expected to be frozen in 2017 if fuel prices stabilise.

But whether the cuts are deep enough is open to discussion. Lawmakers from across the political spectrum have rightly questioned whether there was still room for further reductions. The actual savings for most CLP and HK Electric customers come to only HK$4.40 and HK$7.50 a month, respectively. Given fuel prices have dropped significantly and that the power giants made HK$10 billion and HK$3.2 billion in profits last year, respectively, the public is entitled to ask why the cuts cannot be deeper.

The criticisms levelled at the government are justified. Under the scheme of control agreement with the two power firms, each of them is entitled to 9.99 per cent return on investment. The guaranteed profits means officials can only seek to influence tariff adjustments. Officials did not try hard enough to push for more concessions. The cuts fall short of the expectations of lawmakers and the community.

It is difficult to see how the scheme of control can continue in its present form. The lack of competition and guarantee of handsome returns have put customers in a disadvantaged position. A public consultation on the energy market has opened the door for changes when the scheme expires in 2018. Officials should seize the opportunity to put in place a better regime.

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Electricity bills in Hong Kong to see 1 per cent cut, but lawmakers want more

Households and businesses across the territory will see their cost of electricity reduced by about 1 per cent next year, driven by lower fuel clause charges as global energy prices continue to slide.

But lawmakers slammed the city’s two power suppliers for playing a “numbers game” believing there was massive room for further reductions given huge guaranteed profits and surpluses in what they’ve set aside to procure fuel.

Environment secretary Wong Kam-sing claimed the initial plan from the duo was to freeze rates but that he had pressed for them to be lowered. This is the first rate cut for both companies since 2009.

CLP Power, which supplies two million accounts across Kowloon, New Territories and Lantau, told the Legislative Council economic development panel yesterday that average net tariff rates would be reduced from 114.2 cents per kilowatt hour to 113.2 cents beginning January.

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“Because of a significant drop in fuel prices, the impact of the fuel cost increase has been contained, enabling us to reduce our tariff for 2016.” said CLP boss Paul Poon Wai-yin. The rate could be kept in 2017 if energy prices remained as low, he said.

HK Electric, which serves 570,000 users on Hong Kong and Lamma islands, will reduce average net tariffs from 134.9 cents per kilowatt hour to 133.4 cents. Managing director Wan Chi-tin said the utility had gone a further step to reduce tariffs despite pledging to freeze them for five years in 2013.

For a Kowloon resident who consumes between 400 and 800 units of electricity a month, the reductions would lower their bills by up to HK$4.4. For most residents on the island side who use 500 units a month, monthly bills could be lowered by about HK$7.5. High energy-consuming businesses will enjoy bigger rate reductions due to regressive charging rates.

Civic Party’s Kwok Ka-ki said once fuel prices went up, the companies would immediately increase the net rates. “Basic tariff rates went up for both HK Electric and CLP. Don’t play number games.”

Industrial sector lawmaker Lam Tai-fai said he was “dissapointed” that secretary could only negotiate such an “unreasonably” small reduction given the huge slide in global oil and coal prices. “Oil is at a seven year low, coal is at a nine year low. You certainly paid a lot less for fuel this year,” Lam said.

Labour’s Lee Cheuk-yan said: “It’s obvious there can be further downward adjustment because the fuel cost account has risen so sharply.” Both companies still have surpluses of some HK$2 billion each in their fuel clause accounts.

World Green Organisation chief executive Dr William Yu Yuen-ping believed the rates cuts were made to manufacture a “friendly atmosphere” ahead of the two company’s upcoming negotiations over the scheme of control regulatory framework, which expires in 2018. The scheme currently guarantees it return of 9.99 per cent on its fixed assets.

Wong said his bureau had consulted their experts and felt the tariff proposals were acceptable.

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CLP’s Stance on Climate Change

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Power companies have gathered nearly HK$5.7 billion by overcharging – report

CLP Power Hong Kong Limited (CLP) and The Hong Kong Electric Company Limited have overcharged for electricity and fuel costs to the tune of nearly HK$5.7 billion, Apple Daily reported.

Excluding CLP’s special rebate of more than HK$1.2 billion in August this year, the two power companies still have more than HK$4.43 billion in Fuel Clause Recovery Accounts and Tariff Stabilization Funds – with Hong Kong Electric accounting for HK$2.1 billion and CLP for HK$2.3 billion. The surpluses could allow 320,000 Island customers and 420,000 Kowloon households to be supplied with free electricity for a year.

Tariffs paid by customers are composed of the basic tariff based on a standard cost of fuel required for electricity supply, and a fuel cost adjustment to cover any fuel costs above or below the standard cost already included in the basic tariff. Fuel cost adjustments are proposed every year. If the power company overestimates the fuel cost and hence overcharges its customers, the surplus will automatically go into the Fuel Clause Recovery Account (FCA). For instance, CLP charges its customers 27 cents per unit this year. However, the actual fuel price was 24.6 cents in October. In other words, customers paid a surplus of 2.4 cents per unit.

Paul Poon Wai-yin, Managing Director of CLP Power, said in July that the FCA was designed to “mitigate the cost impact of significant fuel cost fluctuations” and “has served its purpose to stabilise tariffs” for customers.

Prentice Koo, Assistant Manager in Climate Policy and People of the World Wide Fund For Nature Hong Kong, told Apple Daily, “For every payment made per unit of energy, customers are actually contributing to the FCA.”

CLP has been overestimating the fuel cost since 2013. The FCA balance of CLP has HK$1.60 billion while that of Hong Kong Electric had HK$1.41 billion in June – highest in ten years.

Electricity in Hong Kong is supplied by two investor-owned companies – CLP and The Hongkong Electric Company Limited. The two power companies are currently regulated through Scheme of Control Agreements, giving neither of them any exclusive rights over the supply of electricity. The agreements will expire in 2018.

According to the agreements, the permitted rate of return of the power companies is 9.99% of their average net fixed assets. Any excess of revenue over the rate is transferred to a Tariff Stabilization Fund. Therefore, the fund serves as a buffer for the company’s return.

Hong Kong Electric had HK$678 million in its Tariff Stabilization Fund in June this year, while CLP had $HK$749 million.

Koo said, “For power companies, it is best if there is money in the fund. This is because when companies underestimate the fuel_ cost, money can be withdrawn to compensate for inadequate profits.” He also said that for Hong Kong Electric, the sum of money in both the FCA and Stabilization Fund is HK$2.08 billion in total. If each household consumes 400 units of energy a month, the sum of money is enough to pay for 320,000 households’ tariffs for a year.

CLP told Apple Daily that fuel costs are difficult to estimate as international fuel prices are volatile, and even if there was a positive balance in its FCA, CLP would not make a profit from it.

Last month, the Hong Kong and Kowloon Trades Union Council submitted a petition calling for more competition and suggested the government review the profit scheme in the electricity market.


Hong Kong will arrive at the Paris climate talks empty handed; let’s make sure it leaves with bold ideas to cut the city’s rising emissions

Gavin Edwards says the UN meeting in Paris offers an ideal opportunity for our environment secretary to learn about, and adopt, other cities’ pioneering efforts

Hong Kong’s Environment Secretary Wong Kam-sing will travel to Paris at the end of this month for the UN climate negotiations, where world governments will come together to agree a bold new set of targets and actions on climate change. The key outcome will hopefully be a new international agreement on the climate, applicable to all countries, with the aim of keeping global warming below 2 degrees Celsius. In preparation for the meeting, more than 150 countries have already indicated a number of pledges they may be willing to make – their Intended Nationally Determined Contributions – that can form part of the agreement. For example, the European Union pledges to cut its emissions by 40 per cent (from 1990 levels) by 2030, Costa Rica is aiming to be carbon neutral by 2021, and China aims to lower its carbon intensity by 60 to 65 per cent by 2030 (from 2005) and ensure its emissions peak by 2030.

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As we approach the final weeks in the lead-up to the Paris agreement, a couple of challenges are emerging – one global, one local. The global challenge is that the intended contributions by all countries have been modelled by climate scientists and policy experts at Climate Action Tracker (an independent group of four leading research organisations), and they forecast that the world will see a 2.7 degree rise by late in the century if the Paris agreement succeeds and is implemented.

This falls well short of the 2 degree target governments are aiming for, and is a long way shy of the generally accepted safe temperature rise which our planet can tolerate: 1.5 degrees. And this is not just some academic numbers game. At 2.7 degrees warmer, we could experience significant food shortages globally as crops fail in sub-Saharan Africa, and our own major source of food – the Pearl River Delta – experiences increasing flooding. Even a 2 degree rise – the stated aim of the Paris agreement – spells the end of the world’s coral reefs and a whole host of other impacts driven by increasingly extreme weather patterns.

At 2.7 degrees warmer, we could experience significant food shortages globally as crops fail in sub-Saharan Africa

Second, the local challenge: Hong Kong’s contribution to averting catastrophic climate change. Wong gathered key government, corporate and NGO representatives together on November 6 to launch the Hong Kong Climate Change Report, outlining government efforts. However, instead of articulating a plan of action for the decades ahead, he summarised existing policies and efforts, and is taking a wait-and-see approach to the Paris climate negotiation so the government can then consider its next steps. This is odd, given that China (which reports and commits globally on its greenhouse gas emissions, including those of Hong Kong) has outlined its plan well beyond 2020. On a recent trip to the US, President Xi Jinping (習近平) articulated a range of measures, including greenhouse-gas emissions targets, investments in renewable energy, a national emission trading scheme to regulate large carbon dioxide emitters, and clear targets for green buildings.

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Here in Hong Kong, the current plan is to reduce carbon dioxide emissions by 19 to 33 per cent by 2020 (from 2005), but that’s all. With current efforts, we’ll only achieve the low end of this target, and only if the long-promised initiative to reduce the burning of coal for electricity generation is implemented. Contrast this with cities around the world which will come together at a special event during the Paris negotiations, share their ambitious plans, and learn from each other. Greater Taipei will cut its emissions by 20 per cent by 2026 (from 2006), Yokohama will cut by 80 per cent by 2050 (from 2005), London by 60 per cent by 2025 (from 1990) and New York by 40 per cent by 2030 (from 1990). However, Hong Kong’s greenhouse gas emissions have been steadily rising over the past decade, by 23 per cent from 2002 to 2012.

The development of renewable energy in the city has barely begun. And CLP Power is proposing new gas-fired power generation instead of using renewable energy. The social cost of fossil fuel has never been mentioned, even in the latest document of the electricity market regulatory regime review. If our electricity market is not going to change, there is no chance for us to stop climate change. Under the Air Pollution Control Ordinance, carbon dioxide is not even considered a pollutant, even though it is widely agreed that ever-escalating carbon dioxide emissions are one of the largest threats to our planet and our city. Our electricity market is not ready to tackle climate change.

So, if the past decade was something of a lost decade for Hong Kong in terms of making a meaningful and commensurate contribution to tackling climate change, what should we do in the next decade, to catch up?

If our electricity market is not going to change, there is no chance for us to stop climate change

First, the Environment Bureau has a huge opportunity to address the lack of renewable energy development by adopting a comprehensive feed-in tariff policy to reward anyone who installs solar panels on rooftops or wind turbines in coastal waters. As the government wraps up its review of the Scheme of Control Agreement which governs our electricity production, it must include a renewable energy support policy, even if we are one of the last cities in Asia to adopt such a policy.

Second, it’s time for our private sector to put funding into renewable energy and energy efficiency development. Globally, there are more new investments in renewable energies such as wind and solar than there are in coal, gas and nuclear combined. They are effectively winning against these dirty energy sources, because governments around the world realise the importance of supporting safe, low-carbon energy. Some US$270 billion is being invested in low carbon development.

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So instead of supporting CLP’s pitch to build another gas plant, the government should encourage future investment in renewables, and greater investment in energy efficiency. For example, a simple scheme to encourage all grocery and convenience shops to put doors on their display fridges will cut their fridge energy consumption by 50 per cent, according to recent WWF research.

Lastly, we need a plan for Hong Kong that goes beyond 2020. Our environment secretary arrives in Paris empty-handed without a longer-term plan while other cities profile theirs. However, it does not have to be a wasted journey – he will have an incredible opportunity to learn about the pioneering efforts of other cities, and to bring back ideas to adapt to Hong Kong. This can start with a plan to substantially cut our city’s emissions by 2030, and a plan to adopt a new scheme of control to encourage renewable energy development.

The difference between a world that is 2.7 degrees warmer and one that is only 1.5 degrees warmer is the difference between a liveable planet and a planet that is thrown into chaos. It’s time for Hong Kong to step up its efforts by leaving Paris with new ideas and bolder pledges to do much more. And when Hong Kong attends the next big climate conference in a few years’ time, I very much hope that these efforts will earn us international recognition as Asia’s sustainable city.

Gavin Edwards is conservation director at WWF-Hong Kong

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Hong Kong’s CLP, HK Electric could be victims of Norwegian fund sell-off

Power companies CLP and HK Electric could be the innocent victims of a decision by Norway’s parliament to sell off coal investments in the country’s US$880 billion sovereign wealth fund.

According to new rules approved by the Norwegian parliament’s finance committee on Friday, the Government Pension Fund Global – also known as the oil fund because of its funding from oil and gas production – will sell stakes in companies that get at least 30 per cent of their revenue from coal mining or burning fossil fuels or ongoing projects that surpass the 30 per cent threshold.

The measures are to be implemented by January 1, 2016.

The move was welcomed by the country’s lawmakers and environmental groups who estimate the fund’s investments in coal could be more than US$11 billion. It was not immediately known how much of these investments would be affected.

Climate change is one of three themes that Norges Bank Investment Management, which manages the pension fund’s assets, adopts in its investment outlook.

“Coal is by far the biggest source of greenhouse gases, so this is a big victory for the climate,” said committee member Torstein Tvedt Solberg of the opposition Labour party.

The fund has divested from 114 companies in the past three years, including 14 companies in the coal mining sector last year. The fund’s coal mining assets totalled 493 million kroner (HK$486 million) at the end of the first quarter, down from 805 million in December, according to its first-quarter report.

Environmental group Greenpeace expects four companies in Hong Kong and 12 mainland firms to be among 122 enterprises the Norwegian fund might sell its stakes in, potentially raising a combined HK$3.72 billion for the oil fund.

The impact from selling its coal-related investments in Chinese companies should be minimal to Hong Kong’s stock market, given the relatively small stakes involved. The fund’s holdings in Chinese stocks represents a paltry 1.86 per cent of April’s average daily turnover of HK$200 billion.

According to the non-governmental organisation’s estimate, the fund owns CLP shares worth about HK$1.4 billion. Its coal-fired plants represent 66 per cent of its overall power generating capacity.

The fund owns HK Electric shares worth HK$16 million. Its coal-fired plants account for 67 per cent of generation capacity.

Among the 12 mainland companies, the largest investments are in state-owned power producer China Resources Power Holdings and coal miner Shenhua Energy Group.

HK Electric, CLP Power face cut in earnings and prospect of competition in longer term

Government aims to cut 9.9 per cent return the city’s two electricity suppliers currently enjoy and hopes to introduce competition in longer term

The government wants to slash the permitted return of the city’s electricity suppliers to as low as 6 per cent and tighten the process of approving tariffs as it aims to reform the regulatory regime.

Rolling out a public consultation on the development of the electricity market yesterday, environment chief Wong Kam-sing said CLP Power and HK Electric faced a cut in annual returns from the existing 9.99 per cent on their net fixed assets under the 10-year scheme of control agreement, which expires in 2018.

And the controversial idea of importing power from the mainland has been shelved for now.

However, the utilities – both natural monopolies in their own service areas – will be spared competition, at least in the near future. The government will hold discussions with the two firms and conduct joint studies on grid access arrangements after 2018.

“It is unlikely that we would have any new suppliers of sizeable scale either from the mainland or locally in the near term,” said Wong.

“To pave the way for Hong Kong to introduce competition in the longer term, we plan to conduct the necessary preparatory work … such that new suppliers, when available, may participate in the electricity supply market.”

This is the second time in about a decade that the government has taken steps to overhaul the market, which has been dominated by the two suppliers, from power generation to distribution, for more than a century.

CLP serves customers in Kowloon, the New Territories and Lantau; HK Electric caters to Hong Kong Island and Lamma. Their profitability is tied to their spending on electricity assets. They are allowed to earn a 9.99 per cent return on net average fixed assets in the decade to 2018.

Wong said the scheme had worked well, but it could be enhanced in numerous ways, such as by lowering the return rate to as low as 6 per cent and boosting performance through improved incentives and penalties.

Both suppliers said they would co-operate with the government.

CLP said the industry was “hugely capital-intensive and requires long-term investment” and “reasonable return and certainty in the regulatory regime” were key to attracting “sufficient investment to meet the needs of the economy”.

HK Electric said: “We must guard against changing the scheme of control for the sake of change, including the critical success factors like the rate of return and the incentive and penalty scheme.”

The government said it would “not rule out” legislative changes if consensus was not reached with the utilities.

Dr William Chung Siu-wai, an expert in energy policy at City University, expressed disappointment at the decision not to put a priority on breaking the utilities’ dominance.

Democratic Party lawmaker Wu Chi-wai, a member of the Legislative Council’s environmental affairs panel, said the new document was “a refry” of the public consultation in 2005.

The chairman of the Consumer Council, Professor Wong Yuk-shan, said the report failed to provide forward-looking development for the electricity market. He urged the government to raise the proportion of renewables in the mix and step up research on small-scale power generation.


After 2018:

· Cut CLP Power and HK Electric’s permitted annual return to 6pc from 9.9pc now

· Tighten tariff approval process

· Improve incentives/penalties to boost performance

· Study with CLP Power and HK Electric third-party access to their grids, interconnections of grids and segregation of generation, and distribution businesses

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Time to debate a fairer energy market

10 December, 2014

SCMP Editorial

Hong Kong is often hailed as one of the freest economies in the world, with free competition and market access for everyone. But the truth is that certain sectors are still off limits to new players. The energy market is an example. All households and businesses are customers of either CLP Power or Hongkong Electric under a long-standing duopoly system. The companies’ profits are further guaranteed by a rigid scheme of control. There is neither competition nor choices.

The problems have been put into perspective in a comprehensive study commissioned by the Consumer Council. It noted that while the business agreements ensure reliability and growth, the companies can also transfer fuel cost increases to consumers and make high risk-free profits. The scheme lacked transparency and put consumers in an unfair situation, it said.

The watchdog rightly called for breaking up the dominance of the power giants in a gradual reform. This includes liberalising the power generation market, importing more electricity from the mainland and developing regional gas-fired stations. It also called for better protection for low-income users. But the council is not in favour of introducing more competition at the retail level, saying consumers may not necessarily benefit because of high switching costs; and that market players can get around the issue through reconsolidation, as in the case of Britain.

The recommendations follow an 18-month long study by three prominent experts from overseas, taking into account the special circumstances in Hong Kong and foreign experience. Technical as they are, the issues are crucial to the development of a fair and sustainable regime. As the watchdog admitted, the energy sector is one that deals with conflicting goals, such as consumer’s interest, commercial gains, green environment and economic competitiveness. No single model can perfectly address all the issues involved.

But that does not mean the current regime should be left untouched. With the scheme of control expiring by 2018, the government is to consult the public on the way forward next year. Credit goes to the council and the experts for tabling a 170-page report on an industry that has so big an impact on people’s livelihood and economic vitality. The study has set the stage for an informed debate on the way ahead.