16 June 2019
Secretary for the Environment Wong Kam-sing (center) introduces the new development plans of Hong Kong’s power utilities at a press conference on Tuesday. Photo: HKEJ
Secretary for the Environment Wong Kam-sing (center) introduces the new development plans of Hong Kong’s power utilities at a press conference on Tuesday. Photo: HKEJ

Govt eyes electricity subsidies in relief from higher tariffs

Secretary for the Environment Wong Kam-sing said on Tuesday that the government has proposed household electricity subsidies over the next five years to provide relief for citizens as they will face higher power tariffs during the period.

The government entered into post-2018 Scheme of Control Agreements (SCAs) with the city’s two power companies — CLP Power, and Hongkong Electric Co. (HKE) — last year to reduce the permitted rate of return for them to 8 percent from 9.99 percent set previously.

While the scheme, which would last 15 years, is seen helping relieve the public spending on electricity infrastructure, households are still likely to see their bills rise due to the power suppliers’ increasing capital expenditures and higher fuel prices.

After discussions at a meeting on Tuesday, the Chief Executive-in-Council (CE-in-Council) approved the new development plans for CLP covering the period from October 1, 2018, to December 31, 2023, and that of HKE covering the period from January 1, 2019, to December 31, 2023

Under the plans, CLP’s average net tariff rate will increase by 2 percent starting from October this year before another 0.9 percent increase next year, while that of HKE will go up by as much 6.8 percent from January 1 next year, the Hong Kong Economic Journal reports.

During the period between 2018 and 2023, CLP and HKE are expected to hike their charges by 3.7 and 6.2 percent, respectively, each year on average.

To alleviate such heavier tariff burden that will be placed on households, Wong revealed that the government plans to provide each household a subsidy of HK$3,000 in the five-year time frame, equivalent to HK$50 per month.

In order to start distributing the subsidy as early as October this year, Wong said the government will aim to seek funding of around HK$8.7 billion from the Finance Committee of the Legislative Council before the summer recess begins.

This will cover the projected cumulative tariff increase over the five-year period for about half of Hong Kong’s households, Wong said, adding that electricity consumers will only have pay a net power bill of HK$1.36 to CLP per unit and HK$1.04 to HKE by 2023, both of which will be about 30 percent lower that that currently seen in other major cities, such as London, New York and Sydney.

The environment chief also claimed the newly approved SCAs reached with the two power companies offers key features on energy efficiency and conservation as well as renewable energy, stressing households can expect to pay less electricity tariffs if it can be effectively implemented.

Civic Party lawmaker Tanya Chan Suk-chong, who chairs the Legco’s Panel on Environmental Affairs, said although it is understandable that the two power companies will be forced to raise tariffs due to rising costs, their planned increases are too high.

Chan also criticized the government’s proposal of subsidizing household electricity bills, describing the move as an indirect way of subsidizing the two power utilities.

Meanwhile, Greenpeace HK, a non-governmental environmental organization, has expressed worry that the subsidies might end up encouraging households to increase their power consumption.

The green group suggested that the government should keep tariffs unchanged for the first 150-200 units of electricity used by households.

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