HK Electric to cut net tariff by 16pc, CLP slashing 7.4pc in 2024

With international fuel prices dropping from record highs, HK Electric Company will slash its net tariff by 16 percent next year. Another power giant, CLP Power, will lower the net tariff by 7.4 percent.

The electricity charges comprise the Basic Tariff and the Fuel Clause Charge. The Basic Tariff covers power firms’ operating expenses, standard fuel costs and permitted return, and the Fuel Clause Charge represents the cost of fuels.

According to the tariff package 2024 announced by HK Electric, there will be a 5-cent increase in the basic tariff per unit of electricity for the capital investment arising from all upgrading and strengthening work of the power infrastructure.

However, easing international fuel prices resulted in a 36.5 cents reduction of the fuel clause charge per unit of electricity, which offset the increase in the Basic Tariff.

The net tariff for HK Electric in January 2024 will be 165.5 cents per unit of electricity, a reduction of 16 percent compared with 197 cents in January 2023. 

As for CLP, the average net tariff in 2024 will be 142.9 cents per unit of electricity, representing a 7.4 percent decrease.

It said the international fuel prices have fallen from their peak and relieved fuel cost pressure, and the strategy of using a diversified fuel mix of more natural gas, less coal, and importing relatively stable-priced nuclear power have also mitigated the impact of fuel cost volatility.

The adjustments in electric tariffs and the review of the five-year development plans for both power giants were passed by the Executive Council on Tuesday.

CLP said the estimated average annual increase in the Basic Tariff over the next five years will be around 2.2 percent, lower than the anticipated rate of inflation for the same period.

HK Electric stated that the fuel prices are still at a relatively high level though they have leveled off, and expects it to remain volatile against a backdrop of intensified geopolitical tensions.