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CLP's tariffs have always been set on principles of fairness

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I refer to the letter by Cheung Kit-yan of Greenpeace ('CLP's unequal electricity rates rob the poor to benefit the rich', February 25).

CLP's electricity tariffs have always been set on the principles of fairness and to reflect the different costs of serving different groups of customers.

They are designed to avoid cross subsidies between the major groups of customers such as small and large businesses, public services and residential households.

In 1996, with the support of the government and the wider community, CLP introduced a change to the tariff for its then 1.5 million residential customers which comprised 86 per cent of its customer base. That meant the largest group of users paid a progressively higher rate the more units they used within a billing period, so as to promote energy conservation.

This initiative has since been adopted in a number of countries.

Applying the same approach - of increasing unit rates the more energy is used - for large non-residential customers is much more problematic. Unlike residential customers, these customers pay a demand charge based on their maximum energy demand in addition to their energy charge.

This is to reflect the cost of the investment in infrastructure needed to meet their demand for electricity.

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