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The government wants to cut annual returns from the current 9.99 per cent on CLP Power and HK Electric's net fixed assets. Photo: Felix Wong

Bid to cut Hong Kong electricity duopoly’s returns sparks Legco debate

Legislators questioned whether the government had the teeth to slash the permitted return of Hong Kong's electricity duopoly to 6 per cent, as no big new power suppliers are likely to emerge in the near future.

Timmy Sung

Legislators yesterday questioned whether the government had the teeth to slash the permitted return of Hong Kong's electricity duopoly to 6 per cent, as no big new power suppliers are likely to emerge in the near future.

The Environment Bureau decided in March to shelve a plan to import power from mainland China, and instead said it would discuss control agreements with CLP Power and HK Electric when they expire in 2018.

The government wants to cut annual returns - the amount the duo can make in profits - from 9.99 per cent to between 6 and 8 per cent of their net fixed assets.

A public consultation on the development of the city's electricity market is due to be completed at the end of the month.

Unionist legislator Tang Ka-piu urged the government to bring the level below 5 per cent, as he said electricity tariffs had been going up in previous years even though the permitted return had been lowered.

However, he asked in a meeting of the Legislative Council's panel on economic development: "Is it achievable to cut the permitted return to 6 per cent since you are not going to introduce any competition? How are you going to negotiate?"

The Civic Party's Ronny Tong Ka-wah also questioned what bargaining chips the government held in the negotiation process, saying that Hongkongers were captive customers.

Environment secretary Wong Kam-sing said: "There are different tactics we can rely upon when we talk to power companies, such as legislation."

Lawmaker Andrew Leung Kwan-yuen, from the Business and Professionals Alliance, called on the government to set up an independent monitoring organisation to study how the market could be opened.

This article appeared in the South China Morning Post print edition as: Doubts over cuts to power duo's profits
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