Editorial : Cruel Power Tariff Hikes and Poor Gatekeeping

【明報專訊】The two power suppliers in Hong Kong have announced raising electricity charges next January. Despite the authorities' attempt to "play down" the tariff increase by toying with numbers, after a brief calculation, one can find out that CLP Power will raise tariffs by about 19.8% and HK Electric will even raise tariffs by 45.6% compared to the net electricity rate at the beginning of this year. The government has stated that the two power companies have agreed to draw on the Tariff Stabilisation Fund (TSF) "substantially" and shoulder the negative balance of the Fuel Clause Recovery Account (FCA), as if to say the companies have already "taken care" of citizens very well. The reality is that the government did a poor job of gatekeeping. Amidst the adversity of a recession faced by Hong Kong, the two power companies are still insisting on getting the most out of the permitted rate of return of 8% and passing on the rising fuel cost pressure to citizens. The so-called relief measures are merely about returning part of the profits "reaped excessively" from the people in the past to the public. The Scheme of Control Agreements (SCAs) has allowed the two power companies to take complete advantage of citizens. The government must seize the chance of the SCAs' interim review next year to revise the arrangements for things like fuel charges so that the two power companies can no longer be allowed to demand whatever they want.

Electricity bills in Hong Kong consist of the "basic tariff" and the "fuel cost adjustment". The former mainly reflects the power company's operating expenses, fixed investments and so on. The latter reflects the fluctuations in international fuel prices, and customers have to reimburse the actual costs to the power company. Adding the two together equals the net electricity tariff. Over the past year, international fuel prices have remained high due to war and geopolitical factors. The two power companies have long forecasted that electricity tariffs will inevitably go up next year. Yesterday (22 November), the specific plans of the tariff hike were officially unveiled.

According to the government, starting next January, CLP Power and HK Electric will raise electricity prices by about 6.4% and 5.5% respectively, if compared to the rate this month. However, these figures are actually misleading. Previously, when the two power companies announced their tariff adjustment plans at the end of each year, the difference was always calculated on an annual basis. The sudden shift to using a monthly basis as the unit of comparison is extremely unusual, giving people the impression that the companies are playing with numbers to mask the actual increase rate. In fact, if compared with the net electricity tariffs in January this year, CLP Power's actual tariff hike is 19.8%, while that of HK Electric is even as high as 45.6%.

The SCAs between the government and the two power companies allow them to pass on all the fluctuations in fuel costs to the people. During the course of this year, the two power companies have repeatedly raised the fuel cost adjustment, pushing up the overall electricity price. Although it was never formally announced by the authorities, CLP Power's net electricity tariff has actually already risen by more than 10%, while the increase has been even bigger for HK Electric. According to the current SCAs, regardless of how good or bad Hong Kong's economy is, both power companies can earn a full 8% return every year. Such a business arrangement that guarantees profit is rare in the world.

The Secretary for Environment and Ecology said yesterday that during a discussion between the government and the two power companies about the tariff increases, the government asked the companies to consider not earning the full permitted rate of return of 8%, but the two rejected the request based on the grounds that "the spirit of the agreement must be respected". The current SCA was signed in 2018 and will undergo an interim review next year. The government should grasp this opportunity to amend the mechanism. If the two power companies are unwilling to cooperate, the domestic electricity market should be opened up as soon as possible to break the monopoly of the two power companies and introduce competition.

明報社評2022.11.23:兩電暴力加價 政府把關乏力








play down : to try to make sth seem less important than it really is

reimburse : to pay back money to sb which they have spent or lost

misleading : giving the wrong idea or impression and making you believe sth that is not true

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