Editorial:Unfair Advantages Enjoyed by The Two Power Companies

【明報專訊】CLP POWER AND HONG KONG ELECTRIC are set to raise tariffs by 20% and 45% respectively year-on-year next year. While the government is denying that it intends to downplay the tariff increases, it is resorting to a lot of high-sounding talk, threatening that a refusal to let the two companies raise tariffs might "make the power supply unstable" and "cause the power companies to withdraw from the market" as if it is scaring the public on behalf of the two power companies.

The two power companies' year-on-year tariff increases next year will break the records of recent years, adding to the already heavy financial burden on ordinary citizens and small businesses. The government is doing a poor job of safeguarding the interests of citizens. Explaining the tariff negotiations in the Legislative Council the other day, the Secretary for Environment and Ecology compared the net rate in January next year with that of this month and came up with tariff increases of just 6.4% and 5.5%, thus attracting accusations that he was misleading the public. The Environment and Ecology Bureau responded to the criticism yesterday (23 November), emphasising that it had no intention of concealing or downplaying the tariff increases. It said that, in response to the misunderstanding that might have been caused by the opening speech, it would pay more attention to such incidents in the future. It also said that there was mention of the year-on-year tariff increases in the slideshows and graphic information displayed by the representatives of the two power companies during the LegCo meeting.

The Environment and Ecology Bureau has described the controversy over "misleading the public" as "a case of misunderstanding". But still it has not provided a reasonable explanation why it failed to mention the year-on-year increases in the opening statement. In the past, when it came to the annual electricity tariff reviews of the two power companies, the increases have always been calculated on a year-on-year basis. If the officials knew that the two figures of 6.4% and 5.5% were problematic but still chose to make them a key focus in the opening remarks, it was intentionally downplaying the increases on behalf of the two power companies. If the government officials were simply reading off the materials provided by the two power companies without thinking about them, it will inevitably lead to questions about whether the government is capable of detecting the misleading tactics and does a proper job of safeguarding the public interest on the issue of tariff increases.

While some people are resorting to a numbers game and try to downplay the increase, some are employing different types of rhetoric to defend the "violent" tariff increases, which is equally outrageous. Some so-called "environmentalists" not only care about energy saving, but also are very concerned about whether the two power companies can borrow money and raise financing easily. They claim that if the two power companies "foot the bill too much" for the public, it "might affect the companies' credit ratings". The truth is that according to the current Scheme of Control Agreements, the two power companies can earn returns of 8% and make billions of dollars in profits every year no matter how good or bad Hong Kong's economy is, never needing to worry about cash flow. A member of the Energy Advisory Committee from the business sector has even said that if the two power companies do not earn the 8% returns in full, they might not be able to pay dividends to shareholders, going so far as to link the matter with Hong Kong's status as an international financial centre. People with knowledge know very well whether Hong Kong's status as a financial centre will be affected if the two power companies are not earning the full 8% permitted profits.

The current Scheme of Control Agreements will expire only in 2033. Whether the clauses can be significantly altered in the mid-term review will depend on the content of the contract. In any case, the government must grow a spine and show the courage to negotiate with the two power companies when dealing with them. In a capitalist world, there are not many businesses that earn "guaranteed profits" like the two power companies do. It is doubtful whether the power companies will be forced to leave the market if the government stands firm on the issue of electricity tariffs.

明報社評 2022.11.24:兩電坐享利潤保證 社會責任不成比例






/ Glossary生字 /

safeguard:to protect sth/sb from loss, harm or damage; to keep sth/sb safe

grow a spine:to become confident or courageous

stand firm:to be determined

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