CLP Power bowed to public pressure on Wednesday, announcing it will lower its electricity tariff increase from 9.2 percent to 7.4 percent.

The government did not comment whether it found the adjustment acceptable.

Political parties, however, contended even 7.4 percent is still above the inflation rate, therefore it is unacceptable.

The Hong Kong General Chamber of Commerce welcomed the adjustment. Chairman Anthony Wu said the lowered rate will ease the extra burden on businesses.

On Tuesday, Wu, together with the three other leading business guilds, met with the heads of CLP to voice their concerns.

The electricity tariff has two components, namely basic tariff and fuel charge.

CLP lowered only the increase on the fuel charge on Wednesday, but did not lower its planned increase on the basic tariff. Thus, the company, in effect, continues to reap the maximum 9.99 percent profit, permitted under the Scheme of Control Agreement (SCA) with the government, said lawmakers.

The Legislative Council Panel on Economic Development will hold a special meeting on Friday to discuss the tariffs.

Last week, CLP and Hongkong Electric, the city's two power suppliers, announced their electricity tariffs, effective Jan 1.

Hongkong Electric announced an increase of 6.3 percent, while CLP said it would raise tariffs by 9.2 percent, sparking widespread dissatisfaction among all sectors of society.

Just an hour before the Legislative Council raised urgent questions to the government on the electricity tariff increase, CLP announced that it would adjust its tariff increase down to 7.4 percent.

CLP Managing Director Richard Lancaster told the media that the adjustment was made in response to appeals from the government, political parties, commercial guilds and social organizations to minimize the influence on consumers.

As a result of the adjustment, 80 percent of households will be subject to a monthly increase of less than HK$22. Twenty percent of households are unaffected, while the increase for 50 percent of commercial customers will be less than HK$41 a month.

Lawmakers from across the board expressed dissatisfaction with the lowered tariff.

Catering constituency lawmaker Tommy Cheung said the high electricity tariff will impose a heavy financial burden on catering outlets.

Democratic Party lawmaker Fred Li said CLP was merely playing a trick, because the basic tariff remains unchanged at 6.25 percent. Although it has "lowered" the fuel charge, that merely would defer the increase by transferring it to another account, he said.

He called for an early review of the SCA scheduled for 2013, with a view to bringing in new players into the supply market.

Lau Kong-wah, from the Democratic Alliance for the Betterment and Progress of Hong Kong, asked if there is any further room for downward adjustment of the electricity tariff by CLP.

Secretary for Environment Edward Yau responded that the adjustment was a step in the right direction.

But he did not say whether he thinks the adjustment acceptable, or whether he believes there will be room for a further reduction.

joseph@chinadailyhk.com

China Daily

(HK Edition 12/22/2011 page1)