The Chief Executive-in-Council has approved the new development plans for Hong Kong's two power companies.

The development plan for CLP Power and its subsidiary Castle Peak Power will run from October this year to December 2023, while that of Hongkong Electric will start next year and also run to December 2023.

CLP and HK Electric will construct two new gas-fired generators for commissioning in 2022 and 2023 to replace coal units which have been operating for more than 30 years.

The move will increase the overall gas-fired generation of the power companies from 26% for CLP and 34% for HK Electric to 50% for both companies in 2020. It will further rise to more than 50% for CLP and 70% for HK Electric by 2023.

The power companies also plan to jointly build an offshore liquefied natural gas terminal in Hong Kong waters.

To help consumers save energy and enable the implementation of demand response schemes, both power companies will replace their electromechanical meters with smart meters with backend facilities to provide instant power consumption information to customers.

Secretary for the Environment KS Wong said the new Scheme of Control Agreements reached with the two power companies will benefit the whole community.

"The new Scheme of Control Agreements, SCAs, reached with the two power companies are the greenest SCAs ever, offering key features on energy efficiency and conservation as well as renewable energy.

"In the new Development Plans under the SCAs, the power companies have included essential capital projects to change the fuel mix for electricity generation which will help combat climate change and further improve air quality, enhance the reliability and security of local electricity supply and assist in turning Hong Kong into a smart city."

The average Basic Tariff Rate during the entire new development plan period is projected to increase at an annual rate of 1.4% for CLP and 1.2% for HK Electric.

The Government has proposed granting an electricity charge concession of $3,000 over 60 months, or $50 per month, to each residential electricity account when the new Scheme of Control Agreements period starts.

This will cover the projected cumulative tariff increase over the five-year period for about half of Hong Kong's households.

The Government will seek $8.7 billion from the Legislative Council Finance Committee before its summer recess to implement the concession.