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CLP Group

CLP cuts Unpopular tariff rise to 4.9pc

PUBLISHED : Saturday, 31 December, 2011, 12:00am
UPDATED : Saturday, 31 December, 2011, 12:00am

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The row between the government and CLP Power over tariff rises has been settled two days before the new charge is to be introduced, after the utility lowered its proposed increase for the second time.

CLP will raise the tariff by only 4.9 per cent, a significant reduction from the original 9.2 per cent it sought when it announced the increase on December 13. It is also lower than the 7.4 per cent under a revised proposal it put forward on December 16.

The company has also decided to shelve the proposed tariff structure changes for business users, pending further consultations with the affected parties. But it will stick to the original proposal to raise its fuel charge by 3.7 HK cents per kilowatt hour unit.

The adjustments were made amid strong public and government pressure against what officials had said were excessive rises in the face of an economic slowdown expected next year, although CLP Power had said it was under unprecedented cost pressures.

Betty Yuen So Siu-mei, vice-chairwoman of CLP Power, told a news briefing: 'This final package is a result of extensive discussions with the government and has addressed their concerns. We believe the government will find it acceptable.'

Business groups, including the Hong Kong General Chamber of Commerce and Hong Kong Federation of Industries, welcomed the cut. However, environment secretary Edward Yau Tang-wah refused to say whether he accepted it. 'They have responded to our queries already,' Yau said.

Yuen said the reduction was largely achieved by a special rebate of 3.3 cents per kilowatt hour, assuming the company wins a court case and gets refunded for land rent and rates overcharged by the government. It has also cancelled, as requested by the government, capital expenditure on additional generation capacity, which resulted in a 0.8 cent per unit cut in basic tariff. It will also use the tariff stabilisation fund to offset part of the increase.

Yuen sidestepped allegations that the company had cheated the public after initially insisting that it had done its best to minimise its proposed increases, saying only that the firm's cost pressures were genuine.

She also refused to confirm whether the firm would still earn the maximum 9.99 per cent rate of return based on its fixed assets, under its arrangement with the government, and insisted that a balance had been struck between the interests of customers and its shareholders.

However, Ronnie Hui Ka-wah, an energy advisory committee member, said he still felt cheated by CLP, because the proposed tariff rise still hit 8 per cent after excluding the one-off rebate. He said: 'The rent and rate refund belongs to us, the power users, anyway, while the basic tariff cut is meagre.'

Tommy Cheung Yu-yan, a Liberal Party Legislative Council member representing the catering trade, welcomed the adjustment. But he said he wanted the power company to shelve the proposed tariff structure change permanently. Greenpeace, which has lobbied for a cancellation of the bulk-use discount, criticised CLP for favouring big business.