Electricity tariffs frozen

Power giants CLP and HK Electric will freeze their tariffs for next year but lawmakers from both camps called for a decrease as a relief amid the Covid-19 pandemic and economic downturn.

CLP, supplying electricity to the New Territories, Kowloon and outlying islands, will keep its tariff at HK$1.22 a unit and Hongkong Electric, covering Hong Kong Island, at HK$1.26.

Despite both companies raising the basic tariff - CLP by 1.5 cents to 94 cents and HK Electric by 7 cents to HK$1.09 - the increase will be offset by a drop in international fuel prices over the past year.

However, lawmakers were concerned about whether the freeze will last for the whole year. Once international fuel prices go up, the net tariff may increase accordingly.

The Secretary for the Environment, Wong Kam-sing, said the basic tariff increases were due to the firms' investment in natural gas facilities as both switch from coal to cleaner energy.

"The companies needed to invest in low-emission projects and boost the proportion of energy generated by natural gas," Wong said.

"All of these costs posed a huge pressure to increase the tariff but we understand it's a difficult time for citizens and decided to freeze it."

He said the government's HK$3,000 electricity subsidy for each household - HK$50 a month - will last through 2023.

"The average monthly bill for each family is around HK$200 to HK$300. A subsidy of HK$50 per month constitutes 20 percent of it, which is a considerable proportion, and I believe it can ease citizens' burden," Wong said.

But the one-year subsidy of HK$2,000 for each eligible household announced last year will end next month.

The special rebates made as refunds for overcharged rents and rates by the government have been fully returned to citizens and the program for both power suppliers will also be discontinued next year.

CLP's managing director, Chiang Tung-keung, said: "We will render support to Hong Kong people during these challenging times and launch a HK$160 million community energy saving fund to benefit people in different sectors and help stimulate the economy."

HK Electric's managing director, Wan Chi-tin, said his company will spend HK$23 million on relief measures.

"We will continue with the distribution of dining coupons to underprivileged households, as well as programs like the NGO catering subsidy and subdivided unit electricity charges relief," he said.

But lawmakers from the pro-establishment and pan-democracy camps criticized the two suppliers for not being able to cut the tariff when they have recorded profits over the past months.

Lawmaker Luk Chung-hung of the Federation of Trade Unions asked whether the two companies earned most of their allowed profit - eight percent of total company worth - under the Scheme of Control Agreement.

But the utility giants sidestepped the question, saying only that they operated according to the law.

Elizabeth Quat, from the Democratic Alliance for the Betterment and Progress of Hong Kong, said the tariff freeze is disappointing and called for the government to see if there is room for a tariff cut.

Democratic Party lawmaker Kwong Chun-yu questioned the need for HK Electric to apply for the government's employment subsidy in April, to which Wan said his company saw an almost 20 percent drop in electricity usage in April.

"It was shocking news and many colleagues were worried about downsizing," said Wan. "One of the reasons we applied for the subsidy is to guarantee we won't have layoffs. In fact, the HK$50 million we received as subsidies were all used in pushing down the tariff."

The chief executive of the World Green Organization, William Yu Yuen-ping, said the global economy remains gloomy amid the pandemic and international oil prices are unlikely to increase substantially.

"The tariff should not fluctuate too much due to adjustments in fuel costs," he said.

jane.cheung@singtaonewscorp.com