Increase in tariffs stokes inflation fears
Electricity users face average increases in their power bills of up to 6 per cent next year after the city's two power companies announced tariff increases yesterday, fuelling fears of more upward pressure on inflation.
Hongkong Electric, which serves Hong Kong Island, said its average tariff would increase 6 per cent from just over HK$1.20 to more than HK$1.27 per kilowatt-hour. CLP Power will charge users in Kowloon, the New Territories, Lantau and other outlying islands, an average of HK$0.91 per kilowatt-hour, up 4.5 per cent from the current HK$0.87.
The top end increase is almost double the inflation rate. Consumer prices rose 3.4 per cent last month, up from 3.2 per cent in October.
This is CLP Power's first tariff increase in nine years, while Hongkong Electric raised prices two years ago.
Speaking at a Legislative Council economic development panel meeting, Hongkong Electric group managing director Tso Kai-sum said the tariff adjustment was necessary, given the rising cost of coal.
CLP Power managing director Betty Yuen So Siu-mai said the company had done all it could to mitigate the increase.
However, lawmaker Mandy Tam Heung-man accused the companies of trying to squeeze more profits before the current service agreement expires in September next year. The new scheme regulating the power industry will provide for rates of return below 10 per cent compared with between 13.5 and 15 per cent now.
The two companies were locked in 'difficult and complicated' negotiations with the government over the way forward, Environment Secretary Edward Yau Tang-wah said.
He warned that if the government could not reach a deal with the two suppliers by the end of this year, a bill would be tabled early next year setting out a new licensing system.
Lawmaker Wong Kwok-hing urged the government to reject the tariff increases as inflation was just over 3 per cent, while legislator Chan Kam-lam said the increase should be less.
However, Mr Yau said the government had already lobbied the companies to reduce the increase.
CLP Power estimates 70 per cent of its residential customers will pay no more than HK$15 extra each month, while the monthly bills of 70 per cent of its non-residential customers would rise by no more than HK$56. Hongkong Electric said its respective monthly increases were HK$30 and HK$125.
High electricity-consuming businesses said the tariff rise would add extra pressure on their bottom lines.
Catering Industry Association vice-president Thomas Woo Chu predicted restaurants would pass on the extra cost to diners, but he feared this could drive away customers.
An average Chinese restaurant paid up to HK$200,000 for electricity every month, Mr Woo said.
'The cost of running a restaurant keeps increasing, we are forced to charge customers more,' he said.
The owner of a lighting shop in Wan Chai said his company paid up to HK$10,000 a month for electricity.
'We are paying more and more for electricity and rent. If we can't earn from the business, we will close down,' said Leung Wing-on, managing director of King's Lighting Engineering Company.
'We used to turn on all the lights; now we leave only half of them on. Turning on the lights is like advertising the company ... with less advertising, I expect fewer customers.'
Mr Leung said he would not increase the price of his lights as business was poor.
'I have been in this business for 18 years. This year is the worst ever. If I charge customers more, no one will come to my shop.'
Average tariff (cents per kWh)
127.4 2008 up 6%
For 71% of families, monthly bills will rise by up to HK$30
For 70% of businesses, monthly bills will rise by up to HK$125
Average tariff (cents per kWh)
91.1 2008 up 4.5%
For 70% of families, monthly bills will rise by up to HK$15
For 70% of businesses, monthly bills will rise by up to HK$56
SOURCE: HK ELECTRIC, CLPTopics: Inflation CLP Group Business