Hurrah! The government has negotiated a new scheme of control with Hong Kong's two electricity generators.
Monday's agreement cuts their guaranteed return on assets to 10 per cent, from 13.5 per cent for CLP and from 15 per cent for Hongkong Electric. According to officials, that means we can all expect a 10 per cent cut in our electricity bills at some point over the next year.
Big deal. Considering that CLP just hiked its charges by 4.5 per cent and Hongkong Electric by 6 per cent, the promised cut, if it materialises, will leave consumers only a smidgen better off.
Judging by the elated response to the news, most commentators seem to think that even the smidgen on offer is better than nothing, and that the new agreement is good reason to celebrate. Few have stopped to ask why Hong Kong should operate a scheme of control that guarantees fat profits for electricity companies in the first place.
Way back in 1963, when the scheme was first introduced, it made sense for the government to assure the generators that they would make a fixed return on their investments. Hong Kong's economy was developing fast, and the government wanted to encourage badly-needed investment in electrification in order to support growth.
Hong Kong attained developed economy status long ago, yet we retain a third-world scheme designed to reward power companies for boosting their investments in the electricity system.