Households will save about $5 a month under a new deal with the two power supply companies, which will cut their profits by $1.1 billion during the next eight years. The money flows from a renegotiation of the agreement with the Government under which CLP Power and Hongkong Electric set their profits. The agreement, known as the scheme of control, allows the companies to set electricity charges so they make a return of 13 per cent on their fixed assets - in effect, their power stations. Secretary for Economic Services Stephen Ip Shu-kwan disclosed yesterday that an amendment to the deal signed in 1993 - and expiring in 2008 - would be signed this week. He said the 13 per cent net return would not change, but the period over which fixed assets could be depreciated would be extended from 20 years to 35 years. This would prevent the companies replacing equipment earlier than necessary. Because their net profits are based on assets, every time the companies buy new equipment, their assets increase and give them an excuse to increase charges. Mr Ip said: 'This is the first interim review on the scheme of control agreement. The deal will save $1.1 billion in eight years. 'We will safeguard more benefits for the public in the next review in five years.' The deal means every household will save an average of $500 during the next eight years - about $62.50 a year. But the deal disappointed lawmaker Fred Li Wah-ming, the public utility spokesman for the Democratic Party. He said consumers had been paying unreasonably high charges for the past five years. Mr Li said: '$1.1 billion is a very small amount to the two companies, and the loss can be compensated for in future tariff increases. 'The Government should secure a new agreement which will lower the two companies' net return on fixed assets.' He said the ultimate protection to consumers would be to open the market and bring in competition. Mr Li said the clause tying net return to fixed assets 'allows the two companies continuous yet unnecessary development, creating excuses for tariff increase'. In 1997, the Government ordered CLP Power to shelve the final phase of its $24 billion Black Point power station, because of excess capacity. Hongkong Electric profits rose 5.5 per cent to $4.9 billion last year, while CLP Holdings made $8.13 billion in the financial year to September. Neither company would comment on the government announcement.