Increase scrutiny of power companies

A 2 per cent rise in tariffs may not seem a lot, yet how our power companies calculate bills leaves many customers bewildered

PUBLISHED : Tuesday, 19 December, 2017, 1:33am
UPDATED : Tuesday, 19 December, 2017, 1:33am

A 2 per cent rise in power tariffs is arguably not much. It may even come as a relief against a spate of soaring public utility charges. If the numbers tabled by CLP Power are any guide, about 70 per cent of its customers would see their bills go up by HK$9.40 or less a month. Moderate as it appears, it belies the threat of steeper rises fuelled by our pursuit of cleaner energy in coming years.

As in the past, the headline figure – 1.9 per cent to be precise – is understood to be the result of intense behind-the-scenes wrangling. The basic tariff adjustments are indeed considerably higher. But the impact is mitigated by a plethora of bewildering rebates. There has been a suggestion that HK Electric originally put forward a double-digit basic tariff increase that was rejected by the Executive Council. A few hours later, the company announced a net rise of 1.9 per cent, the same as its counterpart.

Hong Kong households can expect electricity bills to rise by 1.9 per cent next year

Households and businesses are understandably feeling helpless, if not frustrated about the way their energy bills are adjusted. Whatever bargaining there was between the government and the power companies remains confidential. The environment minister would not be drawn on the specifics, but stressed the adjustments were made according to the existing mechanism. The lack of transparency and public scrutiny makes the situation highly undesirable.

The tussle may well intensify amid growing pressure for steeper rises in future. Under the 2020 fuel-mix target, half of the city’s energy should be generated by natural gas. That could only mean costlier electricity bills for everyone. While people do not necessarily object to paying more for a cleaner environment, they expect adjustments to be reasonable and well justified.

Expect electricity bills to rise 1 or 2 per cent, Hong Kong customers told

This is a challenge for the government, which came under fire for extending a much-criticised profits scheme that continues to guarantee returns for the power companies’ investments. Although the rate is to be reduced from 9.99 per cent to 8 per cent under the new pact, it is still uncomfortably high. The government has said that the reduced rate of return can translate into a 5 per cent cut in tariff rates. Whether this will materialise in the face of our clean-energy goal remains to be seen.

The social responsibility of the two power giants cannot be overstated. However modest the rise may seem, the collective impact on customers and the economy cannot be ignored. But as listed companies, they are also accountable to their shareholders.

That makes government monitoring all the more important. Officials must exercise due diligence and enhance transparency, and if appropriate, revive subsidies for the needy.