HK Electric 2022 Tariff Adjustments

HK Electric announced today that the upsurge in global fuel prices and a worldwide shortage in supply have resulted in a higher Fuel Clause Charge for 2022, leading to a 7% increase in the Net Tariff, or 8.9 cents per unit of electricity.

Mr. Wan Chi-tin, Managing Director of HK Electric, attributed the tariff increase wholly to the rise in fuel prices which is beyond the Company's control.

Following the annual adjustments, the Fuel Clause Charge will be increased to 27.3 cents per unit of electricity effective 1 January 2022. While the Basic Tariff will remain unchanged at 109 cents per unit of electricity, a Special Rebate of 1 cent per unit of electricity will be provided to ease the pressure of the tariff increase. As a result, the Net Tariff for 2022 will increase by 7% to 135.3 cents per unit of electricity compared to 2021. (see table below)

To further alleviate the tariff impact on the general public under the current economic climate, HK Electric will set aside $63 million from three existing funds to provide support for the underprivileged, promote energy efficiency and conservation and strengthen education on low carbon living. (Appendix 1)

Mr. Wan pointed to the dramatic increases in international fuel prices in the past six months, where the prices for coal and natural gas have gone up by 170% and 380% respectively. In addition, to meet the Government's emission and carbon reduction targets, HK Electric has to increase the use of natural gas for power generation. All this will result in higher fuel costs and an upward adjustment of the Fuel Clause Charge.

"The upsurge in global fuel prices is beyond the control of HK Electric. Despite this, we will provide a 1-cent-per-unit Special Rebate in order to minimise the tariff impact. Worth noting is that fuel cost is passed through to customers and does not form part of the Company's profit," Mr. Wan explained.

Amongst the relief measures to be rolled out in 2022 will be another round of dining coupons for use at designated eateries. It is expected that 50,000 low-consumption residential customers and those enjoying the Company's concessionary tariff scheme will benefit from the $10-million initiative.

Households living in sub-divided units (SDU) will see their subsidies increased from $600 to $1,000 in 2022. As well, HK Electric will continue to assist SDU households with the rewiring and installation of individual tariff meters. Another $23 million will be set aside from the "Smart Power Care Fund" to support the community and NGOs including the donation of energy-efficient appliances to underprivileged families and a catering subsidy to NGO-run community centres.

To promote energy efficiency and conservation, HK Electric's "Smart Power Building Fund" will continue to provide subsidies up to $25 million for different projects and plans to assist building owners to enhance the energy efficiency performance of their building services installed for communal use.

HK Electric is committed to promoting decarbonisation and educating the public on energy efficiency and sustainable lifestyle through different programmes. Every year, the Company allocates $5 million under its "Smart Power Education Fund" to organise various activities. The signature programme, the "Happy Green Campaign" provides funding to primary, secondary and tertiary institutions to carry out projects related to the clean energy theme. In the coming year, a teaching kit will be produced for primary school teachers and a learning pack for kindergartens. HK Electric will continue to train local retirees as ambassadors empowering them to spread the low carbon message.

In support of the Government's long-term goal to achieve carbon neutrality, HK Electric has achieved good progress with the "coal-to-gas" transition. The installation of a new gas-fired unit L11 has been completed with testing in progress and commissioning scheduled for the first quarter of 2022 after that two coal-fired units will cease operation. The installation of another gas-fired unit L12 has also begun and is on track for commissioning in 2023. By then, the proportion of gas-fired generation will be increased to about 70% of total output. At the same time, the Offshore LNG Terminal currently under construction is scheduled for commissioning in mid-2022.

Mr. Wan stressed that there is an urgent need to respond to climate change. HK Electric will promote zero carbon power generation through various means, including the development of a large-scale offshore wind farm, the study into the use of hydrogen energy and other new technologies. HK Electric will also promote energy conversation in the community, the greater use of electric vehicles as well as the introduction of smart meters for customers.

"The work ahead is arduous and will only be successful if we have the support of the community and the efforts of all the parties involved. Committed to combating climate change and the sustainable development of Hong Kong, we shall map out our plan and discuss with the Government on ways to implement," Mr. Wan said.

• 2022 Tariff Review Presentation

2022 Net Tariff

Components	2021 (¢/unit)	2022 (¢/unit)	Adjustment (¢/unit)
Basic Tariff	109.0	109.0	Unchanged
Fuel Clause Charge	17.4	27.3	+9.9
Net Tariff Before Special Rebate	126.4	136.3	+9.9
Special Rebate	-	-1.0	-1.0
Net Tariff after Special Rebate	126.4	135.3	+8.9 (+7%)

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HK Electric 2022 major relief and energy-saving promotion items

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Relief Measures	Dining coupons, $200 per household	$10 million for 50,000 low-consumption residential customers/ those enjoying concessionary tariffs
Electricity subsidy for sub-divided unit (SDU) households, $1,000 per household	$1 million for 1,000 SDU households
Catering subsidy for NGO-run community centres for activities organised for the underprivileged, $30,000 per organisation	$1.5 million for around 50 organisations
Energy Conservation	Energy-efficient appliances for underprivileged, $5,000 per household	$4 million for 800 households
Subsidies for non-residential customers to install energy-efficient equipment • LED lights and energy-efficient air-conditioning equipment, subsidy cap at $150,000 • Projects embracing low-carbon lifestyle and energy efficiency, subsidy cap at $300,000 - $500,000 • Projects deploying gerontechnology and smart technologies, subsidy cap at $300,000	$16 million for over 150 projects • $6 million for around 100 projects • $7 million for around 30 projects • $3 million for around 20 projects ​
Subsidies to enhance energy efficiency of buildings, $250,000 - 500,000 per building	$25 million for around 100 buildings
Public Education	Sponsorships for schools to carry out energy-saving and renewable energy projects, each up to $10,000 or $50,000 respectively	$5 million in total
Training for students and senior citizens as ambassadors
Promoting green lifestyle via dramas, talks, visits and competitions

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