“As international fuel prices have increased sharply, many other cities have also had to increase their power tariffs,” Wong said, flanked by top executives from CLP Power and HK Electric. “Cities like Singapore, Tokyo, New York and London have seen a double-digit rise in their electricity bills, with some even reaching nearly 20 per cent.”

Natural gas, Hong Kong’s main power generation source, jumped in price by at least 65 per cent in the first half of the year.

“Some countries have seen unstable fuel source supply in recent months as prices soar,” said HK Electric managing director Wan Chi-tin. “The current situation is beyond our control.”

According to Wong, a three-member household using 275 units of power a month and paying up to HK$340 (US$44) per month would see an increase of between HK$20 and HK$24 next year.

In a bid to prevent the double-digit increase, CLP Power will draw HK$2.5 billion (US$321 million) from several reserves each company maintains as part of a deal with the government to control the size of their profits, including the tariff stabilisation fund.

CLP Power managing director Chiang Tung-keung said the company expected just HK$900 million to remain in that fund by the end of next year, while another reserve – the fuel clause recovery account – would remain in the red. That account draws on the difference between the projected fuel prices set by the companies and the actual cost they pay for the power sources. Parent company CLP Group reported operating earnings of HK$8.08 billion from its local business last year.

HK Electric would draw HK$450 million from its tariff stabilisation fund and HK370 million from its fuel clause recovery account, pushing it into the red for the first time in nearly a decade. The company last year reported earnings before interest, taxes and amortisation of HK$7.14 billion.

Neither company would reveal how much the coming price increase would have been if they had not used the reserves to offset the costs.

William Yu Yuen-ping, an energy analyst and chief executive of NGO World Green Organisation, said the companies’ decision to dip into the backup funds to keep rates at such a level was “unprecedented”.

“The rise this time is not the full picture. I am not optimistic [the two companies] will be able to continue freezing the basic charge,” Yu said. “They’ve used up their reserves, so what are they going to do for the next two or three years?”

He warned residents to brace for double-digit increases in the future, as the two power companies would continue to invest in new generators in the coming years. “They need to face the reality that transitioning [to clean energy] is painful,” Yu added.

But he predicted prices would stabilise once the city started adding renewable energy, such as wind and solar or other low-emission sources like nuclear or hydrogen into the mix, as these were not pegged to the price of oil and gas.

Yu advised residents to think of ways to save power but warned that the underprivileged would continue to need financial assistance in covering their electricity bill but he feared less help would be available in the coming years.

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Minister Wong insisted subsidies provided by the government would offset the rate increase, as a HK$50 monthly relief payment was higher than the estimated HK$24 average increase. But officials said future price rises were hard to predict as they could not foresee how global oil and gas prices would fluctuate.

A separate HK$80 monthly subsidy, introduced as part of pandemic relief, will expire next May. To help the underprivileged, elderly, disabled and residents living in subdivided housing, CLP Power will provide HK$220 million worth of subsidies in the form of consumption vouchers, one-off payments of HK$1,000 and other aid to encourage the switch to more energy efficient appliances. HK Electric would provide HK$63 million in subsidies.

Businesses and low-income residents were likely to bear the brunt of the pain of the increases, according to industry associations and non-profit groups.

“I believe this will be an additional burden for businesses, as they use more electricity compared to residential homes. A 7 per cent increase will be very high,” said Ben Leung Lap-yan, charter president of the Licensed Bar and Club Association of Hong Kong, adding that the industry was still trying to deal with the fallout from the pandemic.

“Perhaps it’s better to wait until the economy recovers for the government to consider increasing electricity costs in the future.”

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Sze Lai-shan, deputy director of the Society for Community Organisation, said rising electricity costs would increase the burden on residents living in subdivided flats, especially those who did not receive government subsidies.

She also hoped CLP Power’s one-off HK$1,000 subsidy could be distributed to more than the 50,000 people who qualified as they were low-income, disabled, elderly or tenants of subdivided flats.

Angus Yick Shing-chung of the Democratic Party, slammed the government and the two companies for pushing up prices during the pandemic, accusing them of being “unwilling to ride out the difficult times with the public” and putting bigger profits ahead of the people.

The Executive Council, Hong Kong’s de facto cabinet, also on Thursday approved a HK$3.2 billion addition to CLP Power’s 2018-2023 development plan, which was previously granted HK$53 billion.