Despite this week's partial backdown on its proposed tariff increase, CLP Power could reduce it even further by using its multimillion-dollar tariff stabilisation fund, the environment minister said yesterday.
Edward Yau Tang-wah told lawmakers that CLP had not exhausted all options for minimising the tariff increase: it could still use the balance in the tariff stabilisation fund as a cushion to ease the rate rise.
'In the midst of economic uncertainties and inflation pressure, the fund will provide a stabilising function... That's why we believe there is still room to lower the increase,' he said during a question and answer session in the legislature on power tariffs.
The fund's main purposes are to limit tariff increases or enable tariff reductions where appropriate. It is a reserve for excessive profits, which can be used to make up the shortfall when the utility fails to achieve its maximum allowable return on equity. At the end of last year the fund had a balance of HK$1.5 billion, but that shrank to HK$666 million by the middle of this year.
Yau did not say how much further the fund could alleviate the rate increase. CLP said last week that the fund was forecast to drop to HK$300 million by the end of next year - the lowest level in 25 years - and therefore could not be used to ease the tariff increase. But Yau retorted that CLP had underestimated the fund's balance in eight out of the past 10 years.
He said up to 80 per cent of the net proceeds from electricity sales to the mainland could be transferred to the fund, but CLP asserted there would be no such sales next year. Last year, cross-border sales accounted for 7.7 per cent of total sales.