Hong Kong taxpayers must not be left in the dark on size of power bills
Clean energy comes at a price and, despite subsidies for households, the government as gatekeeper should ensure value for money from suppliers
The proposed HK$8.7 billion subsidy to help ease the impact of rises in power tariffs over the next five years ought to win the Hong Kong government some applause.
But the sweet deal soon turns sour when it is put against the massive profits of the two power companies. Not only have officials failed to honour their promise of a 5 per cent tariff cut following a revamp of the much-criticised regulatory scheme, but they are also essentially using taxpayers’ money to subsidise lucrative businesses.
The sorry state of affairs owes much to the scheme of control that guarantees profits for CLP Power and HK Electric based on fixed-asset investments. Last year, officials came under fire for not going far enough when the rate of return was only reduced from 9.99 per cent to 8 per cent under a revised agreement.
The promised 5 per cent cut in tariff as a result of the reduced return was also greeted with scepticism, with critics saying it was too little and might not even be achieved. The criticisms have proved to be justified.
Failing to make good the promised reduction has inevitably undermined government credibility. Environment minister Wong Kam-sing said the 5 per cent cut was based on the assumption that “all relevant factors”, including fuel costs, would not change in the coming 10 years.
But crude oil prices had risen at least 40 per cent since last year, he said. The explanation does little to comfort consumers who feel short-changed by the government.
Clean energy comes with a price. Consumers are expected to pay more as the two companies ditch coal-fired generators in favour of gas and nuclear energy. This is a necessary step to maintain a clean environment. Total investment by the pair will reach HK$80 billion in the next five years. CLP has projected that net tariffs, after rebates, will increase at an average annual rate of 3.7 per cent up to 2023, and HK Electric by 6.2 per cent.
Wong said the proposed HK$3,000 subsidy per household was a new initiative to help alleviate the impact of tariff increases during the transition to a lower carbon future. With HK$50 a month across five years, the relief is limited, but the use of taxpayers’ money to ease the impact of rises will swell the coffers of power companies.
Even though the duo will also provide an annual HK$500 subsidy for eligible subdivided unit households, the amount pales into insignificance compared to the companies’ annual returns.
Insufficient transparency and accountability have prevented the public from judging whether the investments by the two power giants are reasonable. We can only count on the government to exercise its gatekeeping role vigorously and ensure that consumers will not be paying more than necessary.