CLP Power pours cold water on calls for greater competition in Hong Kong's electricity market
Power provider 'eager to maintain status quo' on regulatory framework
The city's largest power provider wants the regulatory framework kept "similar to the current one" to maintain the stability needed to attract investment.
But CLP Power said there was room to enhance the framework to support small-scale renewable energy projects and help customers better manage their demand.
The recommendations were made in a 35-page response to the government's three-month public consultation on future development of the electricity market, which ends on June 30.
"The government recognises that the scheme of control has served Hong Kong well in the past 50 years. We believe it can evolve and form a good basis for any new arrangements," CLP managing director Paul Poon Wai-yin said.
The supplier stopped short of saying whether it agreed with a government proposal to cut its permitted returns on assets but argued that any cap should be set at a level that would attract financing on suitable terms.
Under the current regulatory framework, the annual returns on net fixed assets for CLP and the city's other main supplier, HK Electric, are capped at 9.99 per cent. The government wants to lower this to 6 or 8 per cent after the current scheme expires in 2018. But CLP said it was "premature to comment on what is an appropriate level".
The utility instead proposed three "guiding principles" for the next set of regulatory arrangements - developing a greener and more efficient electricity sector, enhancing the customer experience and effective regulation.
The company said a pilot scheme for feed-in tariffs - policies requiring utilities to buy surplus electricity generated by renewable energy producers at fixed rates - was on the table.
But the firm also suggested net metering, which allows surplus power exported to the grid to offset charges for any power the owner imports from the grid. It said such an arrangement would be a less costly way to spur development in renewables.
"Feed-in tariffs … are controversial … due to the costs of such schemes often exceeding initial estimates," the report said.
The company poured cold water on calls for greater interconnectivity and competition between the two suppliers' grids, saying the costs, benefits and risks were not fully understood.
"Choice will only be an advantage to our customers if it delivers real rather than illusory benefits."
The company stressed that opportunities for renewables were limited, and another way to achieve "value for money" would be to encourage further energy efficiency and conservation.
Greenpeace campaigner Frances Yeung Hoi-shan said CLP wanted to maintain the status quo, and the firm had ignored its call for a 1 per cent target for improving energy efficiency.
