CLP Power pours cold water on calls for greater competition in Hong Kong's electricity market

The city's largest power provider wants the regulatory framework kept "similar to the current one" to maintain the stability needed to attract investment.

But CLP Power said there was room to enhance the framework to support small-scale renewable energy projects and help customers better manage their demand.

The recommendations were made in a 35-page response to the government's three-month public consultation on future development of the electricity market, which ends on June 30.

"The government recognises that the scheme of control has served Hong Kong well in the past 50 years. We believe it can evolve and form a good basis for any new arrangements," CLP managing director Paul Poon Wai-yin said.

The supplier stopped short of saying whether it agreed with a government proposal to cut its permitted returns on assets but argued that any cap should be set at a level that would attract financing on suitable terms.

Under the current regulatory framework, the annual returns on net fixed assets for CLP and the city's other main supplier, HK Electric, are capped at 9.99 per cent. The government wants to lower this to 6 or 8 per cent after the current scheme expires in 2018. But CLP said it was "premature to comment on what is an appropriate level".

The utility instead proposed three "guiding principles" for the next set of regulatory arrangements - developing a greener and more efficient electricity sector, enhancing the customer experience and effective regulation.