Hong Kong power company unveils HK$160 million worth of subsidies ahead of expected electricity bill increase

Zoe Low
·3-min read

One of Hong Kong’s two power companies has unveiled subsidies worth more than HK$160 million (US$20.63 million) ahead of an announcement on how much electricity bills will go up this year, which one expert predicts will be minimal.

CLP Power, which serves Kowloon, the New Territories and Lantau, will give out retail vouchers to 800,000 customers in a bid to boost spending during the coronavirus pandemic. It also unveiled other measures for tenants of subdivided or transitional housing to help with energy saving.

“CLP Power hopes the support programmes will not only benefit people in different parts of society but also stimulate the economy and help it regain its momentum,” said chief corporate development officer Quince Chong on Monday.

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

Hong Kong’s electricity supply will rely less on coal and more on natural gas this coming year. Photo: Sun Yeung
Hong Kong’s electricity supply will rely less on coal and more on natural gas this coming year. Photo: Sun Yeung

The utility, along with HK Electric, is expected to disclose new tariffs during a meeting in the Legislative Council on Tuesday afternoon.

CLP Power will tap its Community Energy Saving Fund, set up last year, to finance its assistance efforts. In addition to HK$80 million worth of retail and catering coupons, the company is also offering a HK$600 (US$77) subsidy to tenants of subdivided units, while HK$2,000 worth of energy-efficient appliances will be provided to 5,000 families in transitional housing.

“The subsidies can be seen as a friendly gesture to show CLP is trying to help residents during this difficult time,” said William Yu Yuen-ping, chief executive of the World Green Organisation and an energy economist. He expected the two utilities would keep tariff increases to a minimum this year due to the economic downturn made worse by the pandemic.

According to both companies’ five-year development plans, residents can expect a 8.9 per cent rise in their bills this year as the proportion of natural gas used in fuel mixes increases to 50 per cent, reducing reliance on coal.

Electricity bills rise in Hong Kong, but subsidies offset higher tariffs

CLP currently charges HK$1.218 per unit, while HK Electric, which serves Hong Kong Island and Lamma, charges HK$1.264 per unit.

The government’s one-off electric bill subsidy of HK$2,000 that began in January, will end next month, replaced with a HK$50 monthly rebate that will continue until December 2023.

Yu said that although both companies would face pressure to increase tariffs due to the greater use of natural gas, its price had fallen this year, along with the cost of oil.

“It is also unlikely oil prices will increase over the next few years, so this could likely slow the tariff hikes in the following years,” he said.

The two companies could also use fuel cost adjustments and a tariff stabilisation fund, which collected excess revenue, to further keep increases low, Yu predicted.

Meanwhile, HK Electric confirmed it planned to build a new open cycle gas turbine on Lamma Island to replace an older coal generator, although the project was still subject to government approval.

This article Hong Kong power company unveils HK$160 million worth of subsidies ahead of expected electricity bill increase first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2020.