Electric tariffs linked to pollution


Kowloon, Hong Kong — (METERING.COM) — January 10, 2008 – Utilities Hong Kong Electric and CLP have signed an agreement with the Hong Kong government whereby they will be allowed to hike electric tariffs if they reduce pollution by more than the stipulated limits – and conversely will have to charge customers less for power if they exceed these limits.

The agreement will last for ten years, and allows the two companies to charge electric tariffs that will earn them a 9.99 percent return on assets. This figure was arrived at, said a government spokesman, because of a perception that the previous rate had been set too high. The public had indicated that it would prefer a rate below 10 percent; the previous rate had been set at between 13.5 and 15 percent, which was regarded as too high.

If either company exceeds the pollution limits they will have to lower the rate of return by between 0.2 and 0.4 percent. If they are able to reduce the amount they pollute by more than the regulatory limit, they will be allowed to earn bonuses of between 0.05 and 0.1 percent. A bonus will also be allowed if the companies are able to increase the amount of power produced using renewable sources.

Pollution has been a problem in both Hong Kong and mainland China in recent years, and it is hoped that the new agreement will improve the quality of life in Hong Kong. Mainland China has not yet adopted a similar program.