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HK Electric Announces Tariff Review for 2013

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HK Electric Announces Tariff Review for 2013

11 Dec 2012

HK Electric today announced a 2.9% tariff increase to reflect rising operating costs and fuel expenses. Effective 1 January 2013, the net tariff will be adjusted from 131.1 cents to 134.9 cents per unit of electricity.

The increase however, is not expected to impact about 18% of the company's domestic customers and 44% of non-domestic customers who have relatively lower monthly consumption, thanks to the introduction of a number of relief measures including the new "Super Saver Discount", devised to ease the burden on customers and encourage energy conservation.

Addressing a meeting of the Economic Development Panel of the Legislative Council today, the Managing Director of HK Electric, Mr. Tso Kai-sum believes the rate of increase to be acceptable to the public. "At a moderate 2.9%, the tariff increase is below the rate of inflation," Mr. Tso said. The moderate increase is made possible as the company has transferred over $300 million from its Tariff Stabilisation Fund to help reduce the pressure on tariff.

Mr. Tso explained that basic tariff for 2013 will be slightly adjusted by 0.6 cents from 94.1 cents to 94.7 cents per unit of electricity due to rising material and engineering contract prices as well as other costs. HK Electric's basic tariff has remained stable in the past four years and even following the 2013 increase, it is still 19% lower than the 2008 level.

The fuel clause charge will be increased by 3.2 cents per unit of electricity from 37 cents in 2012 to 40.2 cents in 2013 as fuel prices are expected to remain at high levels, resulting in higher fuel expenses for the coming year. With this adjustment, the debit balance of HK Electric's Fuel Clause Recovery Account will be lowered to about $500 million by end 2013. Fuel costs are a pass-through and do not form part of the company's profit.

Under the newly introduced "Super Saver Discount", domestic customers using no more than 100 units of electricity in any month will be given a 5% discount on their electricity bills. At present, about 10% of HK Electric's 450,000 domestic customers are eligible for the discount. Customers using in excess of 100 units but not more than 150 units of electricity a month will enjoy a tariff freeze in 2013. These two groups represent about 18% of the company's domestic customers in total.

To contain tariff impact on non-domestic customers, HK Electric has further enhanced its current tariff structure where customers using more electricity are charged higher tariffs at a progressive rate. A new tariff block has been created for non-domestic customers using 500 units of electricity or less a month and this group of customers will also enjoy a tariff freeze in 2013. These customers account for 44% of all non-domestic customers.

Following the tariff review, 70% of HK Electric's domestic customers who use 500 units or below monthly will have their tariffs increased by $13.2 or less a month. For 70% of non-domestic customers who use 1,700 units or below a month, the increase is $49.2 or less a month.

HK Electric remains firmly committed to providing assistance to those in need. The Concessionary Tariff Schemes offer 60% discount on tariffs for the first 200 units of electricity for comprehensive social security assistance recipients, including the elderly, disabled, unemployed and single-parent families with deposit and minimum charge payments waived. These customers can enjoy extra savings with the "Super Saver Discount" if their monthly consumption is within 100 units in any month.

Tariff Review for 2013

(Cents/ kWh) 

Components

2012

2013

Changes

Basic Tariff

94.1

94.7

0.6

Fuel Clause Charge

37.0

40.2

3.2

Net Tariff

131.1

134.9

3.8

(+2.9%)