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Hong Kong should review the profit scheme of its two electricity companies

Submitted by admin on Dec 13th 2012, 12:00am

Comment›Insight & Opinion

SCMP Editorial

No one likes a tariff increase. In the case of electricity bills, public sentiment is even stronger. For decades, an archaic business agreement with the government guaranteed the two power companies a maximum return on their investment. Despite efforts to reduce the profit, CLP Power and Hongkong Electric are still allowed profits of up to nearly 10 per cent until 2018. Consumers have little choice but to live with higher tariffs every year. The only comfort is that the adjustments this year are not as steep as expected.

On January 1, CLP will raise prices an average of 5.9 per cent, while Hongkong Electric will charge 2.9 per cent more. The rises are moderate compared with the 9.2 and 8 per cent sought by the two power giants last year. The increases were eventually reduced to 4.9 and 6.3 per cent respectively after a public outcry. But CLP warned that hefty increases were in store.

Households and businesses are already weighed down by high inflation. The increases, however moderate, will add to their burden. It is, therefore, important for the power companies to reduce the impact. The rebate of the rents and rates overcharged by the government to all CLP customers in the coming year is a welcome step to take.

Rewarding low-use customers is also a commendable strategy to promote energy efficiency. Under the CLP rebate scheme, those who can keep usage below 400 kilowatt hours during the two-month billing period can get a rebate of 7 to 9 cents a kilowatt hour. About 700,000 households and 130,000 general businesses may end up paying the same tariff as before or HK$3 to HK$6 less per month. But for heavy users, their bills will be even higher than previously.

Clean energy comes with a price. The increasing use of natural gas to meet more stringent emission targets is likely to push up tariffs in the future. Like it or not, there will be steeper adjustments ahead. That is the price to pay for a greener environment, and the community should be prepared for it.

But that does not mean excessive charges can be tolerated. The profit scheme for the power giants has put customers in a helpless situation. With the agreement due for a mid-term review next year, the government should explore options to protect consumers’ interests. Sadly, the environment chief has already said there is little room to manoeuvre. The remarks are not reassuring to people who count on the government to play a better role in monitoring public utilities.



CLP Power

HK Electric

profit scheme

Source URL (retrieved on Dec 13th 2012, 6:15am):

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