Lai See

PUBLISHED : Thursday, 07 July, 2011, 12:00am
UPDATED : Thursday, 07 July, 2011, 12:00am

Asia's world city not so clever when it comes to smart meters

Our attention has been drawn to the benefits of smart meters in buildings. We are told by people who know about these matters that the meters can lead to energy savings of 15 to 20 per cent. In Hong Kong that would represent a considerable saving. It would also mean our city would at last start seriously engaging in energy saving. For all its claims as 'Asia's world city', it is a laggard in in the region this area.

The current practice is for air conditioning to be included in the monthly management charges paid to the building management company, which is invariably owned by the landlord. Individual offices have a meter for the rest of their electricity consumption which is paid directly to the utility company.

However, the monthly management charge, of which air conditioning accounts for some 80 per cent, is typically about five times the monthly electricity bill. A smart meter installed by the landlord would enable tenants to know how much they were paying for their air conditioning and what they were paying for. Typically management fees are between HK$5 and HK$7.50 per square foot, and are not broken down.

A smart metering system would enable the chief exceutive to monitor from his desktop, if he was so inclined, the amount of electricity he was consuming a minute, how much it was costing and where it was being used. Armed with this information, companies will be more inclined to switch off lights and equipment at night and turn down the air conditioning in winter. The idea is that, if the tenants make the savings, they, rather than the landlord, get the financial benefits.

Although monthly management fees are viewed as an exercise in recovering costs in many parts of the world, service charges are a profit centre in Hong Kong, so there is little incentive for the landlord to install smart metering.

The question is how to kick-start this change? It's going to be difficult when space is tight and landlords have greater negotiating power. It may be something that will have to wait for the next downturn when tenants are in a stronger position.

Guaranteed wave of patrons

China is not taking any chances with its new high-speed-rail network. A new directive on the Ministry of Finance website recently said the government would pay the costs of officials and civil servants using high-speed trains for work.

Vice-ministers and officials of equivalent rank, heads and deputy heads of government bureaus, together with heads and deputy heads of government bureaus are entitled to ride business class and to claim their expenses. Junior officials have to put up with second class.

This is, of course, an indirect subsidy for the network.

Last year, some 1.67 billion people travelled on China's entire rail network, according to the Ministry of Railways website. It is hard to gauge the impact of allowing government officials use the new high-speed service. To get a better feel for the numbers we skimmed through a 2001 copy of the International Review of Administrative Sciences, and came across a paper by Gavin Drewry and Che-po Chan entitled 'Civil Service Reform in the People's Republic of China: Another Mirage of the New Global Paradigm of Public Administration'. We discovered from this paper that, in 1998, China had some 33 million administrative personnel whose salaries were funded by the state. Of these, 25 million belonged to various public institutions, economic entities such as state-owned enterprises and state corporations. The rest, 8 million, were government and party cardres. So whether it is 33 million or 8 million that are entitled to use the new network, it is in for an administrative shock.

Damned if they do and don't

Spare a thought, but not a tear, for the ratings agencies. They are hammered when they get things wrong, as they did during the Asian financial crisis and again in the run-up to the global financial disaster.

They are now getting pummelled for possibly doing the right thing.

European Union president Jose Manuel Barroso was ticked off at Moody's for downgrading Portugal's credit rating, while he also made noises about setting up an EU-based agency 'that wasn't biased'.

Standard & Poor's was in hot water for threatening to derail the Greek bailout, with German Finance Minister Wolfgang Sch?uble vowing to 'break up' the oligopoly of the ratings agencies. This puts the agencies in the unenviable position - described by German philosopher Friedrich Nietzsche - of sawing off the branch on which they are sitting. A move that will be completed when Moody's finally cuts its AAA rating for the US.