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HK Electric 2023 Tariff Adjustments

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HK Electric 2023 Tariff Adjustments

22 Nov 2022

HK Electric announced today the Average Net Tariff for January 2023 will be adjusted to 197 cents per unit of electricity, up by 10.2 cents, an increase of 5.5% compared to November 2022.

To alleviate the tariff burden of small and medium enterprises and underprivileged families, HK Electric will set aside $95 million to provide a series of relief measures and energy efficiency promotion, including a "Special Electricity Subsidy" benefitting around half of HK Electric's residential customers.

Mr. Chan Loi-shun, Executive Director of HK Electric, described 2022 as a very challenging year for the power industry. As a result of geopolitical tensions leading to skyrocketing fuel prices and tight supply, tariffs and all kinds of energy expenses have been increasing during the year, affecting businesses and consumers alike.

Global fuel price surged continuously during the past 2 years, with the price of oil, natural gas and coal increased by 100%, 200% and 500% respectively since November 2020. This necessitated HK Electric to adjust monthly the Fuel Clause Charge according to an established mechanism, with a cumulative increase of 51.5 cents during the year - from 135.3 cents at the beginning of the year to 186.8 cents in November - resulting in an unprecedented increase of the Average Net Tariff by 38.1% (see table 1).

Given the uncertainty in the future of the energy market, persistently tight supply and high fuel prices, as well as the increased use of natural gas in the coming year, the Fuel Clause Charge has to be increased further. The Fuel Clause Charge for January 2023 will be adjusted from 78.8 cents in November to 82.5 cents, up by 3.7 cents per unit of electricity.

At the same time, HK Electric has to continue to invest in decarbonisation initiatives in support of the Government’s emission and carbon reduction policy. Taking into account the capital expenditure and operating costs required, the Basic Tariff for 2023 will be increased by 5.5 cents, from 109 cents to 114.5 cents.

With the two adjustments above, and the discontinuation of the 1-cent special rebate offered this year, the 2023 Average Net Tariff will be 197 cents per unit of electricity, up by 10.2 cents, an increase of 5.5% compared to November this year (see table 2). Together with the 38% increase so far this year, the Average Net Tariff for January 2023 represents an increase of 45.6% compared with January 2022, out of which 90% is attributed to the increase in the Fuel Clause Charge.

Mr. Chan said that HK Electric has done its best to minimise the tariff increase. The Company appreciated the impact tariff adjustments will have on the underprivileged families and will allocate $40 million for a "Special Electricity Subsidy" to benefit more than 200 thousand households, or over 45% of its residential customers. Residential customers consuming 300 units of electricity or less in a month will receive a "Special Electricity Subsidy" of 9.5 cents per unit of electricity to alleviate their tariff burden and to encourage energy-saving.

Taking the case of a 300-unit monthly consumption as an example, the total electricity charge for January 2023 will be $458.6, which is $2.1 higher than the $456.5 in November 2022.

In addition, HK Electric will allocate a total of $55 million to implement a series of relief measures and energy efficiency promotion, including the distribution of dining coupons to eligible customers, provision of an electricity subsidy to sub-divided unit households, and sponsorship for energy-saving projects in the community (see appendix).

Mr. Chan noted that amidst the extremely uncertain outlook of the fuel market in 2023, fuel supply is expected to remain tight. HK Electric will ensure the procurement of sufficient fuels to maintain stable power supply and strive to control costs while continuously enhancing environmental performance to assist Hong Kong in reaching its decarbonisation targets.

Table 1:

Impact of Fuel Clause Charge on Tariff

(January to November 2022)

Tariff Component

January 2022

(¢/kWh)

November 2022

(¢/kWh)

Period

Adjustment

(¢/kWh)

Basic Tariff

109.0

109.0

-

Fuel Clause Charge

27.3

78.8

+51.5

Special Rebate

-1.0

-1.0

-

Average Net Tariff

135.3

186.8

+51.5

(+38.1%)

Table 2:

Tariff Adjustment for 2023

Tariff Component

November 2022

(¢/kWh)

January 2023

(¢/kWh)

Adjustment

(¢/kWh)

Basic Tariff

109.0

114.5

+5.5

Fuel Clause Charge

78.8

82.5

+3.7

Special Rebate

-1.0

-

+1.0

Average Net Tariff

186.8

197.0

+10.2

(+5.5%)

Appendix : Overview of Smart Power Services -- 2023 Major Relief Measures and Energy-saving Promotion Programmes ($55 million)

Relief Measures

Dining coupons, $200 per household

$10 million for 50,000 disadvantaged households, including concessionary tariff residential customers, disadvantaged households living in sub-divided units (SDUs) or transitional housing, "N have-nots households” or households with financial difficulties referred by NGOs or District Council members, and low-consumption residential customers

Electricity subsidy for disadvantaged SDU households, $1,000 per household

$2 million for 2,000 disadvantaged SDU households

Subsidies for SDU households to rewire and install individual tariff meters, $15,000 per SDU (cap at $60,000 per flat before sub-division)

$1 million for 20 flats with SDU households

Catering subsidy for NGO-run community centres for activities organised for the disadvantaged, $20,000 per organisation

$1 million for around 50 NGO-run community centres

Energy Conservation

Energy-efficient appliances for the disadvantaged, $5,000 per household

$4 million for 800 disadvantaged households

Subsidies for non-residential customers to

• Install LED lights and energy-efficient air-conditioning equipment, subsidy cap at $150,000

• Implement projects embracing low-carbon lifestyle and energy efficiency, subsidy cap at $300,000 to $500,000

• Implement projects deploying gerontechnology or smart technologies, subsidy cap at $300,000

$7 million for around 90 projects

• $1 million for around 50 projects

• $5 million for around 30 projects

• $1 million for around 10 projects

Subsidies to enhance energy efficiency of buildings, $250,000 to $500,000 per building

$25 million for around 100 buildings

Public Education

Funding for schools to carry out energy-saving and renewable energy projects, each from $10,000 up to $50,000

$5 million in total   

Training students and senior citizens as ambassadors to promote decarbonisation

Promoting green lifestyle via activity book, drama, puppet show, talks, workshops, virtual tours and competitions

Spreading and sharing green messages via social media, online platforms and various channels