Hong Kong Electric To Reduce Tariffs By 17.2%

December 14, 2016

NewsStandOnline.Net (14-December-2016): Hong Kong Electric has announced plans to reduce tariffs by 17.2 percent next year, while CLP Holdings Ltd will freeze its rates.

Some 570,000 customers on Hong Kong and Lamma islands will benefit from HK Electric’s rate reduction to 110.4 HK cents per unit.  Meanwhile, CLP, which supplies Kowloon, Lantau, and the New Territories, will freeze its tariffs at 113.2 cents per unit in 2017.  The company will also hand out nearly HK$800 million to customers as a special rebate of 2.3 cents per unit based on their consumption this year.  The reduction will translate to a 2 percent discount, bringing the tariffs down to 110.9 cents per unit.

Secretary for the Environment Wong Kam-sing said in a Legco meeting yesterday that the proposed tariff reductions by the two energy firms, especially that of HK Electric, are of a special nature.  The tariff cuts resulted from the drop in fuel costs and special rebates, and do not suggest a long-term downward trend in electricity rates.

HK Electric chief executive Wan Chi-tin said the company has twice reduced and frozen tariffs in the past four years, and that the 2017 tariffs will be around 8 percent lower than the levels when the Scheme of Control Agreement went into effect in 2009 and the same as the tariffs in 2005.


Wan said electricity tariffs have come down inspite of the fact that more electricity is being generated from the costlier natural gas, which now accounts for 33 percent of the company’s power generation.

The proposed reduction would mean that 70 percent of households with a monthly power consumption of 500 units or below could expect to save up to HK$115 a month on their electricity bill.  Meanwhile, 70 percent of commercial users with a monthly consumption of 1,700 units or below could achieve a monthly savings of HK$391.

Paul Poon, managing director of CLP, said with the HK$800 million special rebates earmarked for 2017, the company would be handing out a combined HK$2 billion as subsidy to customers over two years.  Under its energy savings rebate program, CLP said 35 percent of its residential users and 44 percent of small commercial firms will see their electricity tariffs next year lower than what they paid five years ago.

The World Green Organization predicted that HK Electric could lower tariffs by 1-2 percent by 2019, but it would face pressure to hike rates in 2020.  CLP, meanwhile, could continue to freeze tariffs before 2019, but it is likely to raise tariffs should the price of natural gas go up, the group said.

Legislator Wu Chi-wai said the two power suppliers were given very favorable returns of 9.99 percent under the existing Scheme of Control Agreement.  Wu urged the government to negotiate a lower figure to reduce the impact of tariff hikes.