CLP Power pledges to keep energy tariffs at reasonable level
Energy supplier pledges to try to keep tariffs reasonable, but rise may be higher as domestic source of natural gas as fuel is dwindling
Energy supplier CLP Power has pledged to seek a means to hold tariff increases at a "reasonable level", but warned uncertainties might limit its possibilities.
The firm said yesterday it would keep using cheaper natural gas from the depleting Yacheng reserve in Hainan as long as possible to mitigate a likely sharp rise in the price of replacement gas piped from Central Asia via mainland China.
The company is expected to hand a new tariff-adjustment proposal to the government in mid-October, seeking an increase next year.
"We will work very hard to adjust the increase to a reasonable level," CLP business development director Quince Chong Wai-yan said.
Her remarks follow a warning by chairman Michael Kadoorie earlier this year of a 40 per cent price rise by the end of 2015 as the cost of the new gas, under a contract sealed 20 years ago, would be three times that of the existing supply.
CLP was plunged into a public-relations crisis last year after it sought a price increase of more than 9 per cent. It relented twice in a month-long stand-off with the Environment Bureau, eventually settling for 4.9 per cent.
Chong, a former Cathay Pacific executive, yesterday said it was uncertain how long the Hainan field would last. The utility is expected to use both old and new gas initially when the new pipeline is completed late this year.
Another option being explored is to burn more clean coal and lift the efficiency of the emission control system, so as to reduce the reliance on natural gas.
CLP's average charge per kilowatt hour is 98.7 HK cents, which the power firm says remains one of the lowest in the region.
Chong was non-committal on whether the firm would overhaul its tariff structure to encourage people to conserve energy.
She said it had to be done in a fair manner and take into account the costs of providing electricity to its different categories of users.
Last year, the company proposed a change - advocated by environmentalists - that would have made big users pay more but dropped it in the face of opposition from its business customers.
Chong said CLP would have to consult the stakeholders before making changes in response to public expectations and policy requirements.
City University energy specialist Dr William Yu Yuen-ping, said he doubted whether the two options would really help slow down tariff increases.
"There are going to be more infrastructure projects like the cross-border express rail, and this will boost CLP's capital expenditure and impact on the basic tariff," he said, in a reference to the two power companies' arrangement with the government that allows them a return of up to 9.99 per cent on their net fixed assets.
Yu said if the power firm really did raise its charges by 40 per cent in three years, the annual rise would be as much as 12 per cent
Power tariffs generally consist of two parts, the basic tariff that reflects the capital investment on power generation and distribution; and fuel costs that are passed directly to consumers.