Power failure

PUBLISHED : Friday, 06 January, 2012, 12:00am
UPDATED : Friday, 06 January, 2012, 12:00am

Public pressure seems to be more effective at controlling the electricity tariff rise than the notorious schemes of control, an outdated product of the 1960s that is supposed to regulate the profits of Hong Kong's two power companies.

But, don't be too happy just yet if you think the power companies have bowed to public pressure to lower their tariff increase for this year. Under the profit-guaranteed agreements, power companies could recoup the profits later if they wish.

Many political parties - and even Chief Executive Donald Tsang Yam-kuen - have openly criticised the power companies for their greed and lack of corporate social responsibility over the rises.

It is ironic to see our government, which cannot use the legal system to twist the arm of power companies, relying on the media to help stir up public sentiment to get the power giants to bend a little. Surely Tsang was briefed by Environment Secretary Edward Yau Tang-wah before approving the renewal of the schemes of control in 2008.

Well before then, there had already been calls to reform the system. In 1998, our government employed consultants to investigate our electricity market and suggest ways to lower the tariff. The study confirmed the feasibility of connecting the two power grids and the benefits of introducing competition. We should ask the responsible officials why they did not act on the consultant's recommendations to overhaul the schemes of control, or provide a platform for concerned stakeholders to openly debate the suggestions. Instead they chose to maintain the status quo with the agreements, allowing the power companies to continue expanding their investment to beef up their profits year after year.

In 1999, the Audit Commission condemned the then Economic Services Bureau for not fulfilling its duty to properly scrutinise the power companies' development proposals, which resulted in unnecessary infrastructure investment and made the electricity supply buffer exceptionally high.

Yau missed a golden opportunity to scrap the schemes of control when he became the environment secretary in early 2007. Before the previous agreements expired at the end of 2007, he could have come up with a more environmentally friendly deal that gave power companies better returns if they helped the community to save energy instead of expanding capital investment to reach the permitted profit levels.

Higher power tariffs can be a good thing in terms of improving energy efficiency and cutting waste. We all can easily spot ridiculous wastage of electricity in Hong Kong such as the over-lit city at night and year-round fridge-like indoor environments.

However, higher tariffs will be a burden on low-income households and small businesses. The chief executive candidates should come up with a system that's greener and more considerate to citizens. This could help show they genuinely want to help the grass-roots and small businesses.

Finally, as we head towards the mid-term review in 2013 of the schemes of control, it is imperative to include society's other stakeholders in the process.

Of course, our government need not reinvent the wheel; they can 'reuse' the 1998 consultancy study to tackle the issues.

Edwin Lau Che-feng is director of general affairs at Friends of the Earth (HK)