Update | CLP Power cuts back its tariff increase for next year to 3.1pc
Power supplier sets next year's rise at 3.1pc, far below figure of 11.8pc in its development plan; firm may also buy or hire floating LNG terminal
The city's largest power supplier will increase its tariff for next year by 3.1 per cent - far lower than the projected 11.8 per cent put forward in its development plan.
The increase by CLP Power translates into a rise of 3.4 cents per unit from the current 110.8 cents per kilowatt-hour. The move will generate estimated revenue of HK$1.3 billion.
The news came as the firm also revealed to lawmakers yesterday that it had started to explore a new source of natural gas - by buying or renting a floating liquefied natural gas terminal to help stabilise gas supplies.
The company, which supplies more than two million users in Kowloon, Lantau and the New Territories, had warned of sharp tariff rises as it sought to meet new emission caps imposed by the government amid a depletion of cheap natural gas from a reserve off Hainan .
But the utility said earlier this year that it didn't need the projected tariff rise because of a drop in international fuel prices.
Its managing director, Paul Poon Wai-yin, told the Legislative Council's economic development panel yesterday that the company had done a lot to curb the rise in fuel costs, including by using cheaper natural gas from the Yacheng reserve off Hainan instead of gas from a mainland pipeline originating in Central Asia, which was said to be three times more expensive.
"Having said that, we still have to raise the tariff as we have to cut the carbon emission significantly by 2015, which will almost double the amount of natural gas required," said planning and development director Joseph Law Ka-chun.
Law added that the firm had also made use of HK$2.33 billion of the HK$2.88 billion surplus in a special fuel clause recovery account to offset part of the tariff rise.
Despite the smaller increase and with a depleting reserve, the firm will still need to raise prices by 3.9 to 7.9 per cent each year until 2018, according to its five-year development plan submitted last year.
HK Electric, a subsidiary of Power Assets which is controlled by Li Ka-shing's Cheung Kong group, has pledged not to raise its tariffs before 2018.
"CLP was good at managing public expectations … But the tariff increase could be much higher in 2016 as there's only HK$500 million left in the fuel clause account," said lawmaker Lam Tai-fai, who represents the industrial sector.
Kenneth Leung, who represents accountants, asked if the firm had explored other cheaper gas sources.
Poon said the company was conducting a preliminary study on whether to buy or rent a floating LNG storage and regasification unit, which would resemble an LNG terminal on a tanker.
A CLP Power spokeswoman said it could not provide an estimate at this stage of how much a floating unit would cost.
Deputy environment secretary Vincent Liu Ming-kwong said it had not received the firm's proposal, but the government would consider the floating facility's impact on tariffs.