HK Electric warns fuel charges may soon rise

HK Electric warned on Thursday that customers can expect a significant rise in fuel clause charges from the middle of the year, if instability in the Middle East continues. The power firm - which mostly serves customers on Hong Kong Island - said for next month, the charge will be 30.4 cents per unit of electricity, down from the current 34 cents. The average total net tariff for April, it said, will be 158.3 cents per unit, down from 161.9 cents at present. "The monthly adjustment mechanism for [the charges] has an inherent deferred effect and therefore the present [charge] has not reflected the recent sharp increase in fuel prices under the tight supply," the company said in a statement. "The [charge] would face an unavoidable and significant increase from mid-year if the current market conditions persist or even worsen." The firm noted that its power generation relies primarily on natural gas and coal. It said with the ongoing global uncertainties, it will closely monitor energy markets and supply conditions, and manage fuel inventory, generation operations and emissions in a prudent manner. HK Electric said that as part of its contingency measures, it has made adjustments to the fuel mix and activated standby coal-fired units as necessary. It said this is to ensure that its power supply continues to be stable and reliable. The power company went on to stress that as stipulated under the Scheme of Control Agreement with the government, fuel costs are incorporated based on a pass-through mechanism without making any profit. Edited by Thomas McAlinden