December 6, 2009
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<Oriental Daily on Electricity Tariff>
As I have written before, consumers might pay the full cost for any environment measures under the existing scheme of control. So if you want cleaner energy, the electricity companies will not pay for you. YOU HAVE TO PAY.
轉載自東方日報 :每年盈利超過八十至百億元的兩電仍要加電費，帶動各行業刮起加風苦害升斗市民！行政會議本周二討論兩電來年元旦調整電費，據悉兩電在增加更環保的天然氣發 電令成本大幅上漲後，中電提出加電費百分之二至三，港燈加價壓力更大，學者擔心加電費帶動加風，最終只會轉嫁到市民生活開支，要求港府「叫停」兩電，以免 稍後推動慳電膽券計劃時，電費加完再加。
行政會議周二將審批電費調整，兩電亦會於當日向立法會經濟事務委員會 簡報電費調整安排。兩電提交立法會的文件顯示，去年燃煤價格上漲，至今年六月兩電累積燃料帳虧損分別為三億及八億元，因此極有機會向全港二百多萬用戶追回 虧損。港燈回應指明年需要將天然氣發電比例由百分之十五增至百分之三十。中電則表示現階段不評論事件，留待周二在立法會解釋。
So we have to pay high tariff in the future anyway. How to tackle that? Someone claims we can open up the electricity market.
From my point of view, the permitted rate of return, which is effectively the profit-guarantee-return, should be lowered to the fixed deposit rate in HKD or USD, plus a small premium. For example, a formula making reference to the 1 year HIBOR rate (the rate is currently at 0.54%).Consider this : If someone guarantees you a fixed return on certain investment, the equilibrium rate of return will be just no more than the market risk-free interest rate. Simply because it is GUARANTEED. The return for HSBC’s MPF guarantee fund is no more than 1%. Because it is risk-free, you don’t have to take any risks and this is the maximum return you can get.
So what is the difference with HK’s electricity companies’ investment? Effectively, the return is guaranteed : in case you don’t earn the “guaranteed return”, the government will pay you back in later years (indeed this is what the hk government is doing implicitly). Simply, there is no RISK. So you should pay the return on assets at the risk-free rate.
It is true that investment in electricity assets are long-term and cannot be “sold” without involving huge transactions. How about paying you at a small premium over the long-term 10-year US Treasuries? This is how corporate bonds are priced as well. I saw little difference.
If we take it, the long-term Treasuries yield is about 5% (now at about 3.4%) and add a “long-term” premium at 2% (which i think is very lenient), we have only a 7% permitted rate of return. Compared with the current 9.99% permitted rate of return, this could mean billions of dollars.
