Hong Kong’s power companies are slashing electricity charges amid falling world oil prices.
HK Electric Investments Ltd. (02638.HK) and CLP Holdings Ltd. (00002.HK) will cut tariffs by 1.1 percent and 0.9 percent, respectively, the Hong Kong Economic Journal reports.
More than 70 percent of users whose monthly consumption is below 500 units will save up to HK$7.50 if they live on Hong Kong Island or HK$4.40 elsewhere.
This is the first time in seven years CLP is cutting its tariff, narrowing the price differential between the two companies to 20.2 Hong Kong cents from 20.7 cents.
Fuel costs are expected to fall next year in line with weakening world crude prices, offsetting increases in the base rate of electricity.
Lawmakers, nonetheless, criticized the proposed tariff cuts, saying these do not go far enough.
Analysts said a 2 percent cut would have been more reasonable given that crude prices have fallen to US$40 a barrel from US$100 while coal prices have dropped more than 30 percent.
CLP expects tariffs to be remain unchanged until 2017.
William Yu, chief executive of World Green Organization, said the 1 percent cut is too little given that HK Electric and CLP had HK$2.2 billion and HK$2.1 billion, respectively, in their reserve funds.
If the funds’ outstanding balances remain high, the two companies should offer rebates to consumers, he said.
Raymond So, chairman of the Energy Advisory Committee, said it is normal for electricity charges to deviate from fuel prices as the companies also use natural gas to generate power.
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