THE Government's decision to set up an energy advisory committee should not have an immediate impact on Hong Kong and China Gas Co's profitability, but it can be a first step towards regulating the utility, analysts say. Despite officially backing away on Monday from a controversial Consumer Council proposal to impose price controls, the Government asked the company to sign an agreement requiring it to justify tariff increases and make its tariff-setting mechanism more transparent. Proposed tariff increases can be put before the energy advisory committee, which will then hand the Government a recommendation. Analysts said the Government's new demands could pressure Hong Kong and China Gas, which is the exclusive supplier of Towngas, to keep its tariff increases to a minimum. SBC Warburg analyst Peter Chu said: 'There will be no immediate effect on the company's profits, but this has a psychological impact. It may be the first step towards regulation.' The blue-chip utility rose 25 cents yesterday to close at $14.60, with 5.68 million shares changing hands. The Government on Monday ruled out direct regulation of the company because its rate of return was in line with that of the territory's two electricity companies, which operate under a scheme of control. Seapower Research analyst Samuel Ho said it was still unclear how much power the energy advisory committee would have. He was worried the committee could potentially restrict plans at China Light & Power Co and Hongkong Electric Holdings. W.I. Carr utility analyst Alice Hui was less concerned: 'As long as the two electricity companies propose tariff rises in line with inflation or below inflation, they will be justified.'