The cross-harbour power tariff gap appears unlikely to be narrowed much, with Hongkong Electric expected to offer only a small cut, government and industry sources say.
Officials will report to lawmakers tomorrow on the results of the review of power tariffs and the development plan for Hongkong Electric under a new regulatory regime that has reduced the city's two power firms' permitted return from 13.5 per cent to 9.99 per cent.
But the prospects of a cut comparable to CLP Power's 3 per cent reduction, made in October, appear bleak, with a government source admitting there was only limited room to cut Hongkong Electric's tariff.
A source said the company, which supplies power to Hong Kong Island and Lamma Island, had smaller scope to cut its future capital investment than CLP Power had, while its tariff stabilisation fund was insufficient to finance a large cut.
A Hongkong Electric source said conditions for a tariff cut seemed less favourable than they had been for CLP Power. The company had experienced falling power sales in the first three quarters of the year and growth prospects appeared dim.
The source said most major infrastructure projects planned did not include Hong Kong Island and the firm stood to benefit little from them.
At the start of the year, Hongkong Electric increased its tariff by 6 per cent. CLP Power initially raised its tariff by 4.5 per cent but lowered it by 3 per cent in October when its new regulatory regime took effect.
