CLP Group

Power users could face moderate tariff rises

PUBLISHED : Tuesday, 08 December, 2009, 12:00am
UPDATED : Monday, 03 October, 2016, 5:52pm

Electricity users will face moderate bill increases next year if tariff adjustments are approved by the Executive Council today.

A person familiar with the situation said Exco would study the recommended tariff adjustments for CLP Power and Hongkong Electric after the Environment Bureau completed a review. The person said charges would probably be raised, but the recommended increase would be 'very modest'.

Higher bills would mainly result from an increase in fuel charges, rather than the basic tariff rate, as additional capital spending by the two power suppliers was unlikely. The plan, if approved, will be reported to a meeting of the legislature's development panel this afternoon.

Another person, familiar with the situation at Hongkong Electric, said the spending on fuel would be the main focus of the company's tariff adjustment.

'While the coal price has dropped, it is by no means at a low level,' he said.

'What makes the fuel issue even more important is that the Lamma power station is going to raise its natural-gas usage from 15 per cent to about a third of total electricity generation. And gas is much more expensive than coal.'

The person said electricity sales had not rebounded as strongly as anticipated even though the economy was in better shape now.

A spokeswoman for CLP Power, the city's largest electricity supplier, would not comment on whether its tariff would be increased after unconfirmed rumours that the rise would be more than 1 per cent.

Last year, the two electricity suppliers cut their tariffs by between 3-5.9 per cent after a new regulatory regime on profits, which cut the permitted rate of return from 13.5 per cent to 9.99 per cent, came into force.

The new rule had aimed to offer at least a double-digit cut in the basic tariff - which did not include fuel costs - but the intended tariff reductions were cancelled out by high fuel prices last year.

CLP Power last year doubled its fuel charge by 5.9 HK cents to 11.8 cents per kilowatt-hour consumed, after reporting an accumulated HK$1 billion deficit in its fuel account at the end of last year. With a substantial drop in coal prices from the peak of nearly US$200 per tonne in the middle of last year to about US$80 per tonne this year, the outstanding deficit of the account has fallen to HK$300 million.

CLP Power now charges an average of 88.4 cents per kilowatt-hour used, including the 11.8 cent fuel charge. It is entitled to raise the charge further until the deficit is wiped out.

Hongkong Electric increased its fuel surcharge by 140 per cent last year. It now charges about HK$1.19 per kilowatt-hour, including a 25.4 cent charge on fuel. The company has a deficit of HK$800 million in its fuel account.

Stepping on the gas

The Hongkong Electric-controlled Lamma power station is going to lift its natural gas usage to this amount of electricity generation: 33%