Next year’s mid-term review of agreements regulating the power- supply sector will involve discussions on opening up the market, government officials said.
Kenneth Foo
Thursday, May 24, 2012
Next year’s mid-term review of agreements regulating the power- supply sector will involve discussions on opening up the market, government officials said.
Acting secretary for the environment Kitty Poon Kit took the line yesterday by saying both she and her colleagues are “very concerned” about CLP Power’s warning this month that tariffs may jump 40 percent over the next several years.
Also taking a harder line was lawmaker Cheung Kwok-che, who accused CLP chairman MichaelKadoorie of making threats and urged the authorities to take action over his remarks.
Poon said talks will be held next year as part of the review of the Scheme of Control Agreements with the power duopoly, with view to introducing more competition and lowering tariffs.
In line with the timetable stipulated in the agreements, the government will also discuss changes to the regulatory framework by 2016 at the latest.
Poon said officials will be taking a hard look at the two utilities’ short-term development plans to ensure their capital investment and operating costs – which can be used to back up tariff increases – are justified.
“We will be meticulous in examining the capital investment proposals submitted by them for necessity, timing and cost-effectiveness,” she said.
“This will allow us to avoid investments that are excessive, premature, unnecessary or unreasonable.”
Officials have disallowed such investments before, she said, citing a HK$10.4 billion liquefied natural gas terminal project omitted from the last CLP plan.
“We will also make public details of the discussion with the companies on their new development plans.”
Poon, who was speaking at a Legislative Council session, expects the power companies to submit their tariff proposals along with solid justification, and to fully disclose all relevant details.