Following are the opening remarks by the Secretary for the Environment, Mr Wong Kam-sing, at today's (April 25) press conference on the signing of the New Scheme of Control Agreements with the two power companies:
 
     I am pleased to announce that after more than a year's negotiation, the Government has reached agreement with the two power companies on the terms of the post-2018 Scheme of Control Agreements (SCAs). 
 
     The new SCAs fully reflect the Government's commitments to reducing energy intensity and combating climate change, and meet the public aspirations expressed during the public consultation on the future development of the electricity market in 2015.
 
     The new SCAs reduce the permitted rate of return of the power companies to 8 per cent.  Under the current SCAs, power companies shall continue to earn the same rate of return of 9.99 per cent for non-renewable assets till 2023 subject to the terms of the current SCAs.  Under the new SCAs, there will be an immediate reduction in the permitted rate of return from the commencement of the SCA in October 2018 and January 2019 respectively.  
 
     Also, as all the existing coal-fired generating units will one by one reach the end of their useful life in the next decade or so, with 15-year term of the new SCAs will provide a more certain environment for the power companies to make investments to replace the retiring coal plants with generating units using natural gas and non-fossil fuel sources, etc.  This will help maintain a reliable electricity supply and meet our carbon intensity reduction target to combat climate change.
 
     Promotion of energy efficiency and conservation and the development of renewable energy (RE) will be enhanced under the new SCAs, making the new SCAs the greenest SCAs ever.
 
     Feed-in tariff and RE certificates will be introduced to promote the development of distributed RE in the community, and incentive schemes will be put in place to encourage the power companies to develop RE and facilitate development of distributed RE.
 
     To avoid accumulation of large fuel cost surplus balances by the power companies, the power companies agreed to implement a more frequent fuel cost adjustment mechanism in the next SCA period.
 
     Overall, with the new SCAs, Hong Kong can be greener, reduce its carbon footprint, while having a safe, reliable and affordable power supply.
 
     Thank you.

(Please also refer to the Chinese portion of the opening remarks.)

Ends/Tuesday, April 25, 2017
Issued at HKT 20:06

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