Interest rates force CLP Power to scrap rebate

PUBLISHED : Saturday, 02 May, 2009, 12:00am
UPDATED : Saturday, 02 May, 2009, 12:00am

Electricity provider CLP Power will stop its 0.8 cent-per-unit rebate from this month because low interest rates have slashed returns from its tariff stabilisation fund.

It will be the first time the power firm has stopped the rebate since its scheme of control with the government was introduced decades ago.

'With prevailing interest rates at very low levels and reduction in CLP Power's tariff stabilisation Fund (TSF), interest generated from the TSF has hit a record low,' the company says in an advertisement published today. 'As a result, CLP Power's customers will no longer receive interest credit of 0.8 cents per unit with effect from May 6, 2009.'

A household consuming 800 units of electricity in a two-month billing period has received a rebate of HK$6.40 and a bill for HK$718.8, before the government subsidy.

The main purpose of the fund is to limit tariff increases or enable tariff reductions where appropriate.

Under the scheme of control, the company puts into the fund earnings in excess of permitted levels. Interest goes into a rate-reduction reserve, used to pay the rebate.

A CLP spokesman said the reserve had almost run out because the fund was earning interest of just 0.3 per cent a year.

'We'll resume the distribution to customers if the interest is restored to a suitable level in future,' he said.

The spokesman said the company had informed the government about the possible scrapping of the rebate in October.

The electricity firm said it would send customers a letter with their next bill, reflecting the changes.

Kwun Tong resident Anthony Wan, who pays about HK$700 every two months for electricity, will now have to pay a few dollars more.

'I think the impact of such a move is not very significant, given that the rebate rate is small ... although some may think that the company should not cut the rebate given that it's still earning money,' Mr Wan said.

CLP's rival, Hongkong Electric, does not offer any rebates.