Hong Kong Politics & Protest

Down with duopoly: Group urges more competition and review of profits in electricity market

The Hong Kong and Kowloon Trades Union Council (TUC) submitted a petition on the future development of the electricity market ahead of a Legislative Council Panel on Economic Development meeting on Monday morning.

The petition is asking for competition to be introduced and a restriction of profits in order to allow the public more choice in their electricity supply company and lower bills, RTHK reported.

TUC Chairman Lee Kwok-keung said that, although the cost of fuel has been falling, the companies are still increasing electricity fees. He suggested the government review its profit scheme and mechanism.

consultation document

The consultation document. Photo: enb.gov.hk.

Currently, electricity in Hong Kong is provided by two privately-owned companies, namely the CLP Power Company Hong Kong Limited and The Hongkong Electric Company Limited. The regulation of the two power companies is exercised through the Scheme of Control Agreements, which do not give the companies any exclusive rights over electricity supply. The current agreement with the two companies is set to expire in 2018.

A public consultation on the future development of the electricity market was conducted by the Environment Bureau from March 31 to June 30, 2015. Over 15,000 submission were received, 266 of them being from organisations. The purpose of the consultation was to review the market according to the objectives of safety, reliability, affordability and environmental performance, and examine the possibility of introducing competition into the market.

wong kam-sing

Wong Kam-sing. Photo: GovHK.

Secretary for Environment Wong Kam-sing said that, according to the consultation results, most were of the opinion that the supply of electricity in Hong Kong is stable and there is no need to introduce competition, but the rate of return should be lowered. A consulting agency suggested lowering the rate from 9.99% to around six to eight percent.

Wong said that they would be negotiating with the two companies early next year and the consultant would be asked to provide a new reference rate based on the most updated market information.

lee cheuk yan

Lee Cheuk-yan. Photo: Apple Daily.

Lee Cheuk-yan of the Labour Party said that he was disappointed with the government, because the electricity market is dominated by two big companies and their profits are maintained at a level of 9.99%, but the public are still paying expensive electricity fees. Meanwhile, he said, the government failed to do anything about the duopoly.

The chairperson of the Panel James Tien Pei-chun said he was worried that the government would delay the announcement of the new rate of return and that, as a result, the level would remain high.

Down with duopoly: Group urges more competition and review of profits in electricity market