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5 January 2006 - Hong Kong's government has put forward proposed changes to regulations that could break up the duopoly controlling electricity supplies to the territory. A public consultation paper on the electricity market in Hong Kong from the Economic Development and Labour Bureau also promises to explore liberalization of the market and granting third party access to the power grids.
Hongkong Electric, which supplies power to the island and CLP Power, which supplies the rest of the territory have controlled electricity supplies for nearly a century. The Bureau has proposed a reduction in the maximum permitted rate of return for Hongkong Electric and CLP Power, which sets a ceiling on tariffs, from 13.5 per cent of net asset value to 7-11 per cent after 2008.
Public concern has been rising in Honk Kong over rate rises and the contribution the power companies are making to a worsening pollution problem. Although competition is in theory allowed the lack of access to the power grids controlled by the two companies has effectively ruled out rival power providers and led to what consumers regards as unreasonably high tariffs.
If the proposals are accepted, an independent committee will be set up to examine the feasibility of granting third-party access, for a fee, to the grids and of importing surplus electricity from China.
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