Rail operator calls for more competition, saying charges among world's highest MTR Corp, one of Hong Kong's biggest corporate consumers of electricity, has accused the power duopoly of earning 'super-normal profits' and called for more competition in the market. In an unusual break from the clubby consensus typical in the corporate sector, the government-controlled rail operator delivered a withering attack on a system which it says forces the MTR to pay some of the highest electricity costs in the world. The MTR offered its critical feedback to the first of a two-stage public consultation on the way forward for the power market when the scheme of control governing CLP Holdings and Hongkong Electric Holdings expires in 2008. Chief executive Chow Chung-kong complained: 'There are no incentives in the current regulatory environment to ensure companies supply at a lower cost; indeed the incentives tend to work the opposite way. 'As a result, industrial users in Hong Kong such as MTR bear one of the highest electricity costs in the world.' Mr Chow said there was 'significant scope' for the two electricity suppliers to improve their efficiency and pass the cost savings on to consumers. The scheme of control ensures a return of 13.5 per cent to 15 per cent on fixed assets. This results in fuel charges being passed directly on to customers while there are minimal financial incentives for the companies to improve efficiency. By contrast, the state of Victoria in Australia, where Hong Kong utilities have investments, announced its intention this week to cut tariffs by as much as 25.5 per cent due to changed economic conditions and industry efficiency gains. The MTR, which has confidential off-take agreements with CLP and Hongkong Electric to ensure reliable and sufficient supply of power for its subway networks, paid $544 million in energy and utilities costs last year. The energy cost burden was a key reason behind its decision to have platform screen doors installed at train stations to minimise the loss of air-conditioning. Mr Chow said the scheme of control provided 'a generous' rate of return and a pass-through of fuel costs and overheads to consumers. 'As a result, CLP and Hongkong Electric have earned super-normal profits, Hong Kong has over-invested and prices to end-users are higher than they need be,' he said. The MTR's view is consistent with most of the 900 submissions made to the government so far in being critical of the rate of return from the scheme of control. The corporation suggested the establishment of a professional body to regulate supply, with any future regime to be reviewed every five years. By using performance-based incentives or a lower permitted rate of return, the MTR believed Hong Kong could maintain the same level of reliable and safe electricity supply as in the case of Britain. The corporation, which is 76 per cent owned by the government, said policies were driven by utility companies as a result of a lack of energy policy and economic experts within the government. It called for a policy to spur competition after 2008 by unbundling the territory's electricity generation, transmission and distribution and opening CLP and Hongkong Electric's power grids to third-party access.