Saturday, December 6, 2014

Consumer Council's Electricity Market Study

Hong Kong's Consumer Council recently published its 170-page report on the electricity market, which for many years has been controlled by two power companies: CLP Power Hong Kong Ltd and Hongkong Electric Company Ltd.  The study found that the existing method of regulation had served Hong Kong well providing reliable and affordable supplies of electricity.   But the status quo may not be flexible enough to adapt to the new environmental policy supporting emission reduction over the next 30 years.  The report finds a need to reform the current system but advocates an incremental approach.  Liberalisation of the market should be directed towards natural gas and renewable alternatives rather than to retail competition.  One of the more concrete recommendations was for the Hong Kong Government to "establish a full-fledged energy sector regulator which needs to have the 'critical mass' to perform in relation to the structure and size of the industry, and the principles of transparency and consumer representation should be upheld."  Thomas Cheng, Chairman of the Council's Competition Policy Committee, and Kelvin Kwok, were members of the Council's working group in charge of the study.  Cheng was quoted as stating "It is our sincere hope that the study, from consumer perspective, will provide an important and comprehensive collective set of views to stimulate a structure discussion to advise the Government on the most suitable way forward."  Click the relevant link to download the full report, executive summary, press release or presentation slides.  To listen to Cheng's interview on RTHK's Backchat on 8 December 2014, click here.

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