Pressure remains for power bill rises

PUBLISHED : Thursday, 29 December, 2011, 12:00am
UPDATED : Thursday, 29 December, 2011, 12:00am

The city's two electricity companies have bowed to public pressure and scaled back their proposals for steep tariff increases. CLP Power lowered its proposed rise from an average 9.2 per cent to 7.4 per cent by deferring the recovery of fuel costs. Hongkong Electric adjusted its basic tariff structure so that 70 per cent of its users will be paying less than originally proposed.

The power giants have taken the right steps to ease the burden of the community in times of high inflation and economic uncertainties. Their late concessions, which came more than a week after they repeatedly refused to back down, have dealt a blow to their corporate image. However, for those who want to see more generous reductions the revised adjustments remain too little, too late.

The annual adjustment should not have been such a painful exercise. Unfortunately, it is likely to remain so until better mechanisms have been put in place. Unlike other public utilities, whose annual adjustments require Executive Council approval, the power companies are not subject to such gate-keeping. Instead, they have been guaranteed a nearly 10 per cent rate of return for their investments under a scheme of control agreed with the government. That puts the government in a powerless position even if the increase is deemed unacceptable. The public outcry may have successfully blocked a higher increase this year, but CLP is effectively deferring the increase, paving the way for an even steeper rise next year.

Given the stringent emission reduction targets imposed by the government, the companies must continue investing in cleaner energy. Inevitably, that will raise the pressure for a tariff adjustment. Until the much-criticised agreement expires in 2018 the same controversy is likely to arise every year. While contractual obligations must be observed, the government should review the regulatory regime in the meantime and explore better options for the longer term. The supply of sustainable clean energy at affordable prices should be the goal.



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