Huge refund to CLP Power, Hong Kong Electric sparks questions

The government quietly refunded nearly HK$1.7 billion to the two power companies for overcharged rent and rates on properties even before disputes over the money were finally settled.

The disclosure brought calls yesterday for CLP Power and Hongkong Electric to use the money to offset any price increases in a tariff review expected next month. But while CLP has returned to customers about HK$503 million of its HK$1.52 billion interim payout, Hongkong Electric has yet to say what it will do with its expected HK$1 billion refund, of which it has so far received about HK$140 million.

Neither the companies nor the government have made any public announcement about the payments, except that CLP referred to its refund in a note to its 2012 interim report.

CLP Power has previously warned of a 40 per cent tariff rise in three years due to more expensive and wider use of natural gas. In May, its chief executive, Andrew Brandler, said the company would have to use twice as much gas to meet the government's 2015 emission- reduction target. "The era of cheap gas is over," he said.

A member of the Energy Advisory Committee, Dr William Yu Yuen-ping, said the refund would be welcomed by power users. "With hundreds of millions of dollars, the two power firms will have more room to reduce their tariff increase next year," he said.

The power companies have been in long-running disputes over the way rates and government rents are calculated on their properties. The Court of Final Appeal ruled in favour of Hongkong Electric in June last year, but the Lands Tribunal, which is handling the CLP case, has yet to make a final judgment.