Power pact to be reviewed

June 7, 2023

Secretary for Environment & Ecology Tse Chin-wan said the Government is keeping an open mind with regard to the interim review of the Scheme of Control Agreements (SCAs) and has not set any limit on the scope of the review.


Answering lawmakers’ questions at the Legislative Council today, Mr Tse said the Government and the power companies shall have the right during the year ending December 31, 2023, to request modification of any part of the current SCAs.


The Government is preparing to conduct an interim review of the SCAs this year together with the power companies.


He noted that in respect of the views collected, the Government intends to negotiate with the power companies to modify the current SCAs, including but not limited to reducing the permitted returns, requesting power companies to share fuel costs in the event of energy crisis, and reviewing the incentive and penalty mechanism by increasing penalties for major power outage incidents.


The SCAs set out the Customer Performance Incentive/Penalty Mechanism covering four performance categories, namely Supply Reliability, Operational Efficiency, Customer Services and Supply Restoration. The relevant mechanism will also be included in the review.


Upon completion of the interim review, the Government will report the outcome in due course.


Regarding potential access to the power grid by third parties, Mr Tse noted that a stable and reliable electricity market is essential for Hong Kong's energy security, economic development and people's livelihood.


The environment chief pointed out that according to overseas experience, opening up the power grid will not necessarily reduce electricity tariffs and ensure a stable electricity supply.


He added that whether the power grid should be opened up in the long run will involve complex considerations, including ways to eliminate vicious competition while ensuring that power companies will invest adequate resources, construct and maintain a stable and reliable electricity supply, maintain a reasonable level of electricity tariffs, and provide clean energy to achieve the goal of carbon neutrality.

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