The statement came after ATV News reported that the government would release a document either in December or early next year that would tie electricity tariffs to the consumer price index and interest rates.

This would spell the end of the scheme of control, which has been in place since the late 1970s and which guarantees an annual return of 13.5 per cent on Hongkong Electric and CLP Power's average net fixed assets. It would also mean the government is bowing to critics' arguments that the scheme encouraged overinvestment by the power utilities.

The current scheme was signed in 1993. The Economic Development and Labour Bureau is expected to release the document on the future development of the electricity market and the scheme of control soon.

A bureau spokesman last night did not deny the ATV report, but said the scheme of control would be allowed to run its course and any changes would only be introduced after it expired.

'The government is keeping an open-minded attitude towards any view,' he said.

A Hongkong Electric spokeswoman declined to comment on the ATV report or on the government consultation, but she defended the usefulness of the scheme last night.

'The scheme has been effective ... in ensuring that Hong Kong has a stable supply of electricity and reasonable tariffs,' she said.

'It has played an important role. We believe changes should not be introduced for the sake of change. Any change must be considered in light of the reliability of the power supply as the primary consideration.

'If anything goes wrong, the consequences could be severe - something which Hong Kong could not afford.'

She said the firm would work closely with the government to establish a regulatory mechanism most suitable for Hong Kong.