WEDNESDAY, MAY 21, 1975
GOVERNMENT UNABLE TO AGREE ON ELECTRICITY CHARGE INCREASE
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THE FINANCIAL SECRETARY, MR. PHILIP HADDON-CAVE, TOLD LEGISLATIVE COUNCIL THIS AFTERNOON THAT THE GOVERNMENT +FEELS UNABLE TO AGREE TO THE PROPOSED AVERAGE INCREASE OF 2-1/4 CENTS PER UNIT, SOUGHT BY CHINA LIGHT AND POWER, AT THE PRESENT TIME.
HE MADE THE STATEMENT IN REPLY TO A QUESTION FROM MR. JAMES WU REGARDING THE COMPANY'S APPLICATION FOR AN INCREASE IN ELECTRICITY CHARGES.
THE FOLLOWING IS THE FULL TEXT OF THE FINANCIAL SECRETARY'S STATEMENT
→IN ACCORDANCE WITH THEIR OBLIGATION TO THE GOVERNMENT UNDER THE SCHEME OF CONTROL, THE CHINA LIGHT AND POWER COMPANY LIMITED ON 28TH APRIL SUBMITTED AN APPLICATION TO INCREASE THEIR BASIC TARIFFS BY AN AVERAGE OF 2-1/4 CENTS PER UNIT OR BY 11.2% OF THE PRESENT TOTAL UNIT CHARGE.
+THE COMPANY PUT FORWARD THREE MAIN REASONS FOR THE INCREASES PROPOSED. THE FIRST CONCERNED INCREASING COSTS, BOTH CAPITAL AND RECURRENT. THE COMPANY STATED THAT,
THE COMPANY STATED THAT, IN ADDITION TO THE GENERAL RISE IN COSTS IN THE LAST YEAR OR SO, THEY HAVE BEEN PARTICULARLY HARD HIT BY EXCEPTIONALLY LARGE INCREASES IN THE PRICES OF SOME ITEMS OF PLANT AND EQUIPMENT. THE SECOND REASON RELATED TO THE NEED TO SECURE AN ADEQUATE CASH FLOW POSITION TO FINANCE EXPENDITURE ON TRANSMISSION AND DISTRIBUTION NETWORKS WHICH WILL BE NECESSARY DURING THE NEXT FEW YEARS IF THE COMPANY IS TO MEET THE GROWING DEMAND FOR ELECTRICITY FROM NEW AREAS SUCH AS THE NEW TOWNS. THE THIRD REASON PUT FORWARD FOR THE INCREASE WAS THE NEED TO CONTINUE TO MAINTAIN ACCEPTABLE STANDARDS OF RELIABILITY OF SERVICE IN BOTH EXISTING AND NEW AREAS.
+MUCH OF THE DATA OF WHICH THE APPLICATION WAS BASED HAD BEEN PREPARED BY THE COMPANY SOME TIME BEFORE THE APPLICATION WAS SUBMITTED AND WAS ALREADY AVAILABLE TO THE GOVERNMENT AS PART OF THE REGULAR SYSTEM OF KEEPING THE GOVERNMENT INFORMED AS TO THE STATE OF THE COMPANY'S AFFAIRS.
+THE GOVERNMENT HAS BEEN IN CLOSE TOUCH WITH THE COMPANY DURING THE LAST THREE WEEKS AND HAS CONSIDERED THE COMPANY'S POSITION AS REFLECTED IN THE COMPREHENSIVE DATA AVAILABLE TO US VERY CAREFULLY. FOR TWO REASONS, HOWEVER, THE GOVERNMENT FEELS UNABLE TO AGREE TO THE PROPOSED AVERAGE INCREASE OF 2-1/4 CENTS PER UNIT AT THE PRESENT TIME. IN THE FIRST PLACE, THE COMPANY'S CASH FLOW POSITION WILL BE SOMEWHAT BETTER THAN PREVIOUSLY ESTIMATED PARTLY BECAUSE OF THE BOARD'S DECISION TO SEEK A RIGHTS ISSUE, WHICH IT IS EXPECTED WILL RAISE APPROXIMATELY $60 MILLION FROM THE COMPANY'S SHAREHOLDERS.
/+AND, SECONDLY,