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The Executive Council approved today (December 10) the Development Plans for the next five years of the Hongkong Electric Company Limited (HEC) and CLP Power Hong Kong Limited and Castle Peak Power Company Limited (collectively CLP).
2014-18 Development Plans
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"With the assistance of an independent energy consultant, the Government has completed the review of the two power companies' Development Plans for the next five years. We have spared no efforts in performing our gatekeeping function in the review and have critically reviewed the need, timing and budget of the capital projects proposed by the power companies, with a view to accepting only those capital project proposals which are absolutely necessary to ensure that the public will enjoy reliable, safe and environmentally friendly electricity supply at reasonable costs," said the Secretary for the Environment, Mr Wong Kam-sing.
After detailed discussions, HEC and CLP have agreed to defer or reduce the scope and scale of a few major capital projects in their original proposals. This, together with other revisions, reduces HEC's originally proposed capital expenditure in the 2014-18 Development Plan from $25.4 billion by 49 per cent to $13 billion. CLP has agreed to reduce its proposed total estimated capital expenditure from its original proposal of $43.3 billion by 21 per cent to $34.1 billion. Taking into account inflation, the estimated capital expenditures in the power companies' 2014-18 Development Plans are lower than those of the current five-year period.
The only new generation system facility that has been included in the 2014-18 Development Plans is a new gas-fired generation unit for HEC. It has been included on a provisional basis subject to the Government's written confirmation after completion of the power generation fuel mix review and the review on Hong Kong's future regulatory framework for the electricity market.
2014 Electricity Tariffs
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The 2014 electricity tariff review is approved as part of the two power companies' 2014-18 Development Plans. The two power companies will increase their average Basic Tariff Rates (HEC by 7.5 per cent and CLP by 5 per cent). Taking into account the adjustment in the Fuel Clause Charge, in 2014 HEC's average Net Tariff Rate will remain unchanged whereas CLP's average Net Tariff Rate will increase by 3.9 per cent.
2015-18 Projected Electricity Tariffs
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The two power companies have used the best available information to project their projected levels of average Basic Tariff Rates, Fuel Clause Charge and average Net Tariff Rates. From 2015 to 2018, HEC's projected Basic Tariff Rate will increase on average by around 1 per cent while CLP will increase its projected Basic Tariff Rate by an average of 1.8 per cent.
HEC's average Net Tariff Rate is expected to remain rather stable from 2015 to 2018. CLP forecasts its average Net Tariff Rate to rise with year-on-year adjustments ranging from 4.1 per cent to 11.8 per cent, mainly due to increase in fuel costs. This is to reflect the latest gas prices from new sources in place of fast depleting existing supplies, and to meet the more stringent emission ceilings for air pollutants prescribed in the Technical Memoranda under the Air Pollution Control Ordinance with effect from 2015 for better air quality. The Government is working with CLP to mitigate the tariff impact over the coming years.
"The electricity tariffs of 2015-18 are projections only. The actual tariffs to be charged to consumers each year will be determined in the preceding year, following discussions between the Government and the two power companies during the annual Tariff Review, taking into account the latest developments including changes in fuel costs, etc," Mr Wong stressed.
Details of the 2014 electricity tariffs and the projected electricity tariffs from 2015 to 2018 are set out in the tables attached.
Energy Efficiency
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"The wider use of cleaner fuel in place of coal in power generation will inevitably lead to a rising trend in electricity tariffs. Therefore, if we want to achieve better air quality and lower air pollutant emission in conjunction with alleviating the burden on electricity users due to rising electricity tariffs, we will have to further promote energy efficiency to reduce electricity demand. Energy conservation has always been one of the major energy policies of the Government," Mr Wong said.
Ends/Tuesday, December 10, 2013
Issued at HKT 20:31
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