Major political parties call on Hong Kong government to review contract terms with 2 power firms over electricity bill rise
- Starry Lee from Democratic Alliance for the Betterment and Progress of Hong Kong cites coming midterm review
- Federation of Trade Unions legislator Kwok Wai-keung questions if there will be room for more competition in power industry if current suppliers refuse to budge on terms
Two major political parties in Hong Kong have called on the government to review its contract terms with the city’s power suppliers after households were told they would face an electricity price increase of up to 45 per cent.
But the government on Wednesday dismissed an earlier claim by lawmakers that environment minister Tse Chin-wan had tried to give a misleading picture of the rate rises the day before when CLP Power and HK Electric announced them.
CLP Power revealed that its customers would pay 6.4 per cent more in January than they did now, while HK Electric said its bills would be 5.5 per cent higher. But lawmakers were quick to note the rises ran as high as 45.6 per cent after increases to the monthly fuel clause charges since the beginning of the year were taken into account.
Starry Lee Wai-king, chairwoman of the pro-establishment party Democratic Alliance for the Betterment and Progress of Hong Kong, on Wednesday said she understood the government would review its contract with the two utilities that granted them an 8 per cent annual rate of return until 2033.
“I expect that in the review, the government can reasonably reflect [the concerns] to CLP Power and ask it to be reasonable [when making profits under the pricing] mechanism,” she told a radio programme.
Next year’s review was agreed upon when the deal, known as the Scheme of Control Agreement, was renewed in 2018 and the permitted yearly return was lowered from 9.9 per cent. It remains unclear whether authorities have the power to alter the terms midway through the contract.
Speaking on the same radio programme, Federation of Trade Unions legislator Kwok Wai-keung questioned whether the two companies should receive the full 8 per cent.
“Hong Kong has a lot of development projects in the future ... If both power companies refuse to budge [on the 8 per cent profit], can our future development plans allow for a new company to join? So we can increase competition?” Kwok said.
The Environment and Ecology Bureau defended Tse’s comments to Legco members and pointed to higher energy costs around the world.
“Due to the soaring international energy prices, electricity bills have risen significantly this year. Many are concerned about how much the electricity tariff will increase next year compared to the current level,” the bureau said.
“This is why minister Tse pointed out: ‘In terms of the actual net electricity prices charged to the public, the increase in January next year compared with the current level in November is 6.4 per cent for CLP Power and 5.5 per cent for HK Electric.’”
Hong Kong’s 2 power firms to raise tariffs by as much as 6.4 per cent
The bureau emphasised that Tse had no intention of downplaying the increase in electricity charges, but he would pay more attention to possible misunderstandings in the future.
It also clarified representatives from CLP Power and HK Electric laid out the 19.8 per cent and 45.6 per cent year-on-year rise in their address to lawmakers.
Hong Kong has only two power companies, CLP Power and HK Electric. CLP Power serves Kowloon, the New Territories and Lantau Island, while HK Electric covers Hong Kong Island and several outlying land masses.
CLP Power earned HK$8.49 billion in 2021, while HK Electric made HK$2.93 billion.
CLP Power announced it would keep its basic tariff unchanged for a third consecutive year at 93.7 HK cents (12 US cents) per kilowatt-hour, but it would increase its fuel charge to 62 cents per kWh. Taking existing rebates into account, bills in January would be 6.4 per cent higher than November.
Hong Kong’s CLP to offer subsidies to 150,000 families in need amid tariff rise
HK Electric, meanwhile, 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.
Compared with the start of the year, residents would be paying CLP Power 19.8 per cent more and HK Electric an additional 45.6 per cent by next January after taking into account the monthly rise in fuel charges.
When asked about the coming review of the profit deal, HK Electric said it was too early to comment. The Post has also contacted CLP Power for comments.
