WATER charges may have to increase at a higher rate under a proposal endorsed by the Executive Council yesterday.
The Finance Branch has finished an 18-month study into how to set the target rate of return on assets of various government utilities.
It is understood that Exco has decided to lower the rate of return for government tunnels and marine ferry terminals from 15 to 13 per cent.
But the target return for water supplies would be raised from seven to eight per cent.
The administration started a rate-of-return review in April 1993 after severe criticism from legislators that the profit level of the risk-free utilities was too high.
The Government will announce its decision today.
It is understood the review does not cover postage increases - postal services enjoy a rate of return of 16.7 per cent - because the Post Office will become a trading fund operation, allowing it to keep profits for reinvestment.
The then secretary for the treasury, Yeung Kai-yin, said revenue from fees and charges accounted for 14 per cent of total recurrent revenue in 1991-92.
About half was derived from the five government utility operations.