Hongkong Electric

Green group says power companies can limit price rises

Green group finds that CLP and Hongkong Electric have funds to keep increases down

PUBLISHED : Tuesday, 04 December, 2012, 12:00am
UPDATED : Tuesday, 04 December, 2012, 3:22am

Power price increases for next year could be held down by falling fuel prices and the return to consumers of excess fuel charges and earnings, a green group says.

World Green Organisation, a new Hong Kong-based group, said that in these circumstances CLP Power could hold its increase to 6.1 per cent while Hongkong Electric's rise could be as low as 3 per cent.

Group chief executive Dr William Yu Yuen-ping, a member of the government's energy advisory committee, said both firms failed to forecast fuel prices accurately, leading to overcharging.

"They could have done better in this aspect," he said.

The group's forecasts were based on a past downward trend of international fuel prices, an average 1 per cent annual power demand growth, and use of surpluses in the companies' fuel costs accounts and tariff stabilisation funds.

CLP raised its price by 4.9 per cent this year after a public row and a call by the government to cut its originally proposed 9.2 per cent increase. Hong Kong Electric's rise was 6.3 per cent. The adjustment for next year is expected to be announced next Tuesday.

Studies by the group of the two power companies' mid-year financial reports showed that CLP had up to HK$217 million in excessive fuel charges collected from customers and a stabilisation fund balance of HK$513 million. Ploughing back these surpluses could trim the increase by up to 1.5 percentage points.

But Hongkong Electric had a deficit of about HK$800 million in its fuel cost account that roughly offset the positive balance of the stabilisation fund, leaving it less room to manoeuvre.

The group believes both firms will have surpluses - in their fuel cost accounts and tariff stabilisation funds - generated from earnings in excess of the permitted level - by the end of the year, although the exact levels were difficult to gauge now.

A CLP spokesman would not comment on the forecast and said it was premature to speculate on the balance of its fund.

Last year it forecast its fuel cost account deficit would hit at least HK$800 million by the end of this year and Hongkong Electric said its would be HK$1.38 billion. But a drop in the international coal price by as much as 30 per cent over the year rendered the forecast inaccurate.