Hong Kong’s 2 power firms to raise tariffs by as much as 6.4 per cent from January
- CLP Power customers will see their bills go up by 6.4 per cent next year, while those using HK Electric are set for 5.5 per cent rise
- But lawmakers note that when increases in fuel clause charges are taken into account, residents will pay up to 45 per cent more than at start of year
Hongkongers are set to pay as much as 6.4 per cent more for electricity next year, the city’s two power companies have said, triggering calls by politicians for the utilities to accept lower profits and help residents struggling with economic hardship.
They called on the government to find more stable sources of fuel, including nuclear energy from mainland China, to help guard against such increases.
“The increases are astounding,” said lawmaker Edward Leung Hei, of the Democratic Alliance for the Betterment and Progress of Hong Kong.
“That of HK Electric is exceptionally shocking to the 1 million residents living on Hong Kong Island. Also, the way in which the government has put the increases into context is seriously misleading.”
CLP Power, which serves Kowloon, the New Territories and Lantau Island, revealed it would keep its basic tariff unchanged for a third consecutive year at 93.7 HK cents (12 US cents) per kilowatt-hour.
But the company would increase its fuel charge to 62 cents per kWh. Taking into account an existing rebate, their bills will be 6.4 per cent higher starting in January compared with November’s level.
HK Electric, which serves Hong Kong Island and several outlying islands, said it would increase its basic rate by 5 per cent to 114.5 cents per kWh, and raise the fuel charge to 82.5 cents per kWh, up 3.7 per cent, amounting to an overall increase of 5.5 per cent compared with this month’s prices.
The basic tariff rate has been frozen this year, although fuel charges are subject to monthly changes.
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“The government negotiated with the two power companies once it received the proposed electricity rate increases from the two power companies,” he said. “We asked them to spare no effort in reducing the increase rate and minimising the impact of power price adjustments on society.”
Under an agreement with the government, both CLP Power and HK Electric are allowed an 8 per cent annual rate of return. Tse said the arrangement, which was binding until at least 2033, gave Hong Kong an edge in ensuring a safe, reliable and efficient electricity supply at a reasonable rate in the city.
“You have tried to squeeze every penny out of the 8 per cent guarantee under the agreement and passed on the fuel costs to consumers,” lawmaker Starry Lee Wai-king, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said.
“Is there more room to fulfil their social responsibilities and bail them out? My answer is yes, but they said no.”
In a paper submitted to Legco earlier this month, authorities said both companies were facing “tremendous pressure” to adjust rates due to the installation of gas-fired generating units and an offshore natural gas terminal to meet the city’s decarbonisation goals.
Tse told legislators that authorities were in discussion with their mainland counterparts over supplying fuel alternatives such as nuclear power and renewable energy to help lower electricity prices.
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Nuclear power accounted for 34 per cent of CLP Power’s overall output last year, while natural gas was responsible for 47 per cent and coal 18 per cent. HK Electric does not use nuclear power, and relied on equal parts natural gas and coal with a small amount of renewable energy last year.
Hong Kong narrowly avoided a double-digit increase in power tariffs last year, although the companies had been tasked with working towards decarbonisation goals by relying more on natural gas and renewable energy.
Authorities in 2021 froze this year’s basic tariff of CLP Power and HK Electric at 93.7 cents per kWh and HK$1.09, respectively. But both companies have increased their fuel clause charges every month since February, with a nearly threefold increase by HK Electric from 27.3 cents per kWh to 78.8 cents this month.
Meanwhile, the firms’ tariff stabilisation funds dropped significantly in 2021 to HK$3 million for CLP Power and a HK$344 million deficit for HK Electric.
The fund was set up to alleviate the impact of tariff increases on consumers, if the net revenue of the power companies exceeds the permitted return.
Both companies said they would bring forward special rebates to encourage consumers to save energy.
CLP Power said users who consumed 600 units of electricity or less every two months would enjoy a rebate of 9.3 cents per unit, while HK Electric vowed residential customers consuming 300 units or less in a month would receive a subsidy of 9.5 cents per unit.
The war pushed many European countries to switch from using natural gas to coal, but the change coincided with Indonesia banning coal exports in January to protect domestic supply, he said. Indonesia is the world’s biggest producer of thermal coal.
The announcement by the Opec+ alliance of oil-exporting countries last month of a daily cut of 2 million barrels in crude production was expected to further boost the prices of natural gas, Yu said.
NGO Greenpeace called on the government to step up energy-saving measures and develop renewable energy more vigorously in the face of the rising electricity charges.
