Power bills will soar for years

PUBLISHED : Tuesday, 28 February, 2012, 12:00am
UPDATED : Tuesday, 28 February, 2012, 12:00am


Regular and substantial electricity-tariff increases will be needed for the rest of this decade to pay for higher fuel costs as a result of a new gas supply from the mainland and measures to tackle climate change, CLP Holdings boss Michael Kadoorie says.

As the group reported its results for last year yesterday, Kadoorie defended CLP Power for the first time since controversy erupted over proposed tariff increases late last year, and criticised the government for failing to explain its energy policy.

'It is noteworthy that the government has found difficulty, or has perhaps been reluctant, in explaining its policies for provision of public services, including electricity, the choices involved in its policy decisions, the consequences for services providers and the resulting cost increases for consumers,' he said.

But a spokesman for the Environment Bureau said it had strived to increase transparency over tariff-review issues and its energy policy.

'The power firms also have a responsibility to explain to the public the justifications behind their tariff adjustments and respond positively to queries by the government,' he said.

The power firm last year proposed raising the electricity tariff by 9.2 per cent for this year, but subsequently cut the rise to 4.7 per cent amid government and public pressure.

Accusing some critics of being 'misinformed, incorrect and unjustified', Kadoorie was puzzled as to why a rise in the cost of a public service - 'which elsewhere would be unremarkable and unremarked upon' - became a source of major political controversy.

Kadoorie said the tariff increases - mainly due to rising fuel costs - were the result of a string of choices by the government in its pursuit of cleaner power generation.

He said fuel costs alone would go up 2.5 times from the current level by 2015 due to a new gas-supply deal with the mainland agreed between the Hong Kong and central governments in 2008.

The rise in the fuel cost would represent a 40 per cent increase in overall electricity costs to the consumer, Kadoorie said, making 'regular and substantial' tariff increases essential.

Yet the government's decision to source gas from the mainland and scrap a proposal to build a liquefied-natural-gas terminal in Hong Kong had limited the city's options and reduced its ability to acquire cost-competitive gas supplies in the international market, Kadoorie said.

Another factor affecting costs would be a plan to provide more fuel through cleaner gas and nuclear power plants, as well as renewable sources, Kadoorie said.

Kadoorie called for a public debate over energy policy with 'honest and informed discussion about their consequences, that strikes a balance between supply reliability, emission performance and tariff levels. They [the choices on energy policy] should be made by the government and society, not CLP'.

Hongkong Electric also said yesterday that it expected increasing fuel prices to put pressure on tariffs in the next year.