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  • Sep 22, 2014
  • Updated: 12:56pm
CommentInsight & Opinion

Public interest must come first in deals with power companies

Edwin Lau calls for fairer and greener terms in government's contract with service providers

PUBLISHED : Tuesday, 19 March, 2013, 12:00am
UPDATED : Tuesday, 19 March, 2013, 4:25am

The financial secretary's latest budget responded, as usual, to public sentiment by offering various "candies" to the people, including another round of electricity subsidies.

As has been pointed out, these subsidies encourage people to consume more electricity, moving us away from the government's supposed goal of energy conservation. They are a blow to the efforts of Environment Secretary Wong Kam-sing to achieve cleaner air and a low-carbon economy.

Wong has also been given the important task of reviewing the scheme of control agreements with Hong Kong's two power companies this year. As a newcomer to government, he will face tough challenges in these negotiations.

His predecessor, Edward Yau Tang-wah, failed to protect public interests during the previous overhaul of the agreements; power companies were guaranteed a 9.99 per cent rate of return annually on their investment, meaning they could raise tariffs if they didn't reach the permitted profit levels.

Yau claimed a victory under the revised deals, endorsed in 2008, for adding a clause that said if Hongkong Electric and CLP Power met annual energy savings targets, they would be awarded a bonus of 0.02 percentage point return, on top of the 9.99 per cent permitted.

Hongkong Electric has never achieved its energy savings target, whereas CLP earned an estimated additional HK$17 million a year from 2009 to 2011 because it met the goals. But why should the public have to pay more for power companies going green? What about corporate social responsibility?

Last month, the Legislative Council's economic affairs panel invited concerned parties to voice their views on the schemes of control as part of the mid-term review. We want to see a transparent negotiation process.

In the past, it might have been understandable that lopsided agreements were necessary to attract power companies to invest more and provide a steady power supply. But these antiquated agreements are a thing of the past in developed cities today. Why should we have to accept it?

The government should no longer allow profits to be based on capital investment; instead, they should be based on performance, with a greater emphasis on the environmental aspects.

The government should see the mid-term review as an opportunity to introduce aggressive energy-saving targets, while introducing carrot-and-stick measures requiring the power companies to share any extra earnings from energy-saving practices with their customers. Above all, members of this administration must avoid repeating the mistakes of their predecessors.

Edwin Lau Che-feng is director of general affairs at Friends of the Earth (HK). www.foe.org.hk

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