Hong Kong's power duopoly is likely to face minimal regulatory changes when the existing scheme of control ends in 2008, according to a legislator and analysts. Commenting on responses to the government's first-stage public consultation on the post-2008 regulatory blueprint, Democratic Party member Fred Li Wah-ming said the party supported the argument by CLP Holdings and Hongkong Electric that a reliable and safe electricity supply should be the most important objective in reforms of the power sector. The firms are using this argument to resist changes to the scheme. 'Reliability and safety of the power supply is their biggest selling point. That's why I am worried about whether the government will really introduce significant changes,' he said. The scheme of control ties the suppliers' profits - in a range between 13.5 and 15 per cent - to their spending on fixed assets. Nearly 70 per cent of the more than 900 respondents in the three-month consultation that ended in April said they considered electricity tariffs to be reasonable, but believed the power firms' returns were too high. The government said it would proceed with the second round of the consultation in the next few months to map out a regulatory framework. But Mr Li said he had serious doubts about the credibility of the findings. He cited a Democratic Party survey in January, which found that 70 per cent of the 800 people polled believed tariffs were too high, 'completely contradictory' to the results of the second survey. Brokerage Merrill Lynch estimated the chances of drastic reforms were low as most people favoured a regulatory mechanism similar to the scheme of control. Survey respondents also disagreed with introducing competition through increased interconnection and integration of Hong Kong's power sector with the mainland.
