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Following is a question by the Hon Frederick Fung and a reply by the Secretary for Economic Development and Labour, Mr Stephen Ip, in the Legislative Council today (June 6):
Question:
The Government is holding discussions with the two power companies on the post-2008 regulatory arrangements. In this connection, will the Government inform this Council:
(a) of the latest progress of the discussions with the two power companies, including the consensus reached so far, and whether the regulatory arrangements are expected to be finalised within the current year as scheduled; whether the two power companies still insist on a higher rate of permitted return and a longer period for the agreements; if so, of the measures in place to deal with the situation, and whether it will drop its related proposals made earlier;
(b) whether it knows the stance of the two power companies on the entry of new electricity suppliers into the electricity market, and of the impact of their stance on the ongoing discussions; whether it will reject any proposals for offshore supply of electricity to Hong Kong in order to protect the interests of the two power companies; whether the terms of the new regulatory arrangements will apply to new electricity suppliers in the future; and
(c) of the impact of the impending change of government and the reorganisation of policy bureaux of the Government Secretariat on the ongoing discussions?
Reply:
Madam President,
(a) In 2005 and 2006, the Government conducted a two-stage public consultation on the "Future Development of the Electricity Market in Hong Kong". During the consultation period, we received views of the Legislative Council, and organisations and individuals from different sectors of the community. The Government has carefully studied the views received and reported the consultation results to the Legislative Council Panel on Economic Services. Since mid last year, we have been discussing with the two power companies the post-2008 regulatory arrangements. The issues discussed include the regulatory framework of the electricity market, term of the agreement, rate of return on fixed assets, mechanism for setting tariff, linking the rate of return to emissions performance, etc. As the Government is still negotiating with the two power companies, it is not appropriate to disclose the relevant details at this stage.
The Government understands clearly the views and expectations of the public through the public consultation exercise conducted earlier. The Government's position is that the new regulatory package must be in the overall interests of Hong Kong. Our target is to finalise the post-2008 regulatory arrangements this year.
(b) In processing any new application for supplying electricity, the Government will take public interest as the primary consideration. Government's decision will not be dictated by the views or stance of the two power companies. We shall take into account whether the relevant proposal for supplying electricity can comply with the relevant legislation and provide consumers with reliable, safe, environmental friendly and efficient electricity supply. We shall also consider aspects such as land use and the planning standard, design and operational mode of the proposal. Assessment will be made on the impact of the proposal on the public and on the future opening up of our electricity market. For example, if a proposal entails laying a new network for electricity supply in an area already installed with such a network, the Government will be concerned that duplicative road-digging and cable-laying works would cause disturbance and inconvenience to the public. We are not aware of any other place that adopts such an approach in opening up its electricity market. Moreover, duplicating supply network is not a sustainable way to open up the electricity market and it will make the progression to an open market even more difficult. The Government will consider new applications for electricity supply having regard to the above factors.
(c) Environmental protection and energy are closely related. The Government's proposals on the post-2008 regulatory arrangements have included a number of initiatives on environmental protection. The Economic Development and Labour Bureau and the Environment, Transport and Works Bureau have been working closely and have jointly discussed various topics on environmental protection with the power companies. The re-organisation of policy bureaux would not have any impact on the Government's on-going negotiation with the power companies.
Ends/Wednesday, June 6, 2007
Issued at HKT 13:00
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