World Green Organisation’s response on Electricity Tariff Adjustment

CLP and HKE today announced that they are going to increase their net tariff by 5.9% and 2.9% respectively starting January 2013. Dr. William Yu, the CEO of World Green Organisation (WGO) said the Scheme of Control Agreement review in 2013 may be one of the reasons why the two power companies did not follow the approach they used during their first attempt in tariff increase announcement in last year. However, the public may be unhappy about the latest CLP tariff increase rate which is higher that local inflation rate, according to the public poll commissioned by WGO in September.

WGO commissioned the Energy and Environmental policy unit in City University Hong Kong to conduct a public opinion survey in September 2012. 20.6% of respondents disagreed with 5% tariff increase rate. However, 60.8% and 82.8% said they are discontented if the tariff increased by 7% and 9% respectively. As the increase adjustment proposed by CLP is higher than the 5%, the public may be unhappy about the proposal.

WGO welcomes the two power companies to provide special rebate to low income groups. CLP will provide a rebate for their customers consuming less than 400 kWh a month, while HKE will freeze the tariff rate for low energy consumption groups and will provide discount on tariff for those who consume less than 100 kWh a month.

Fuel Clause Charge is the most significant factor contributing the CLP’s net tariff increase rate, with 26% increase compared with last year. WGO urges the government to set up a Natural Gas Stabilization Fund to help the public ease their financial burden.

WGO also urges the government to review the current Scheme of Control Agreement by including operation efficiency and energy saving performance in the calculation of return rate of the two power companies. The two power companies should also reduce the reserve margin to 20%-25%.