Electricity consumption pushed up by Government’s subsidy

[Press Release – 2012.11.18] Electricity Charge Subsidy Scheme contributes to the surge of electricity consumption of local households, the World Green Organisation found.

According to its latest research, the World Green Organisation found that the monthly average electricity consumption of local household increased by 9% and 7.7% during the government‘s launch of the two subsidy schemes in September 2008 and July 2011 respectively. However, the consumption rate dropped by 1.2% between August 2009 to June 2011, when there is no subsidy for local households.

Dr William Yu, Chief Executive Officer of World Green Organisation said that the rise in electricity consumption is the unintended consequence of the subsidy scheme. He added that the asset value of power plants, the most important factor affecting the permitted return of power companies, will increase when the power companies have to invest more money to build more power plants to meet the increasing demand in local electricity contributed by the consumption surge. The increase in average asset value will result in electricity tariff rise according to the current Scheme of Control.

To relieve the public financial burdens caused by the fuel costs increased, Dr. Yu suggests the government to adopt the “Natural Gas Stabilization Fund”. He estimates that the spending of the fund in the first year of implementation is around HKD $ 3 billion in order to maintain the increase of tariff rate that is closed to the local inflation. He added that the spending is more cost-effective than the Electricity Charge Subsidy, which spends more than HKD $ 4 billion a year.

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