XN000022-1982-11-24 — Page 19

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WEDNESDAY, NOVEMBER 24, 1982

CALL FOR +PREVENTIVE MEASURES+

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THE HON K.C. CHAN EXPRESSED THE VIEW AT THE LEGISLATIVE COUNCIL TODAY THAT WITH THE NEW COAL-FIRED POWER STATIONS, HONG KONG MIGHT GET A BREAK FROM THE STEEP INCREASE OF ELECTRICITY TARIFFS IN THE COMING YEARS.

RIC

THIS WOULD BE SO, HE SAID, PROVIDED THAT SAVINGS IN FUEL COST WERE MAINLY PASSED ON TO THE CONSUMERS AND THAT THEY WERE NOT ALL ABSORBED INTO THE PERMITTED RETURN OF 13.5 PER CENT OF THE AVERAGE NET FIXED ASSETS, WHICH WAS ABOUT 24 PER CENT OF AVERAGE SHAREHOLDERS FUNDS BY 1981 FIGURES.

HE SUGGESTED THAT PREVENTIVE MEASURES SHOULD BE WORKED OUT SO THAT THE PERMITTED RETURN WOULD NOT BE AUTOMATICALLY MAXIMISED BY A PRO RATA INCREASE IN RATES IN THE EVENT OF A STEEP FALL IN CONSUMPTION ARISING FROM A RECESSION OR ENERGY CONSERVATION MEASURES.

+ IF THE PERMITTED RETURN IS COMPUTED ON SHAREHOLDERS FUND, IT MAY INHIBIT DEVELOPMENT TO MEET THE EXPANSION OF INDUSTRY AND DOMESTIC DEMAND, MR CHAN EXPLAINED.

+BUT ON THE OTHER HAND, IF THE PERMITTED RETURN IS BASED ON AVERAGE NET FIXED ASSETS, IT MAY RESULT IN THE CONSUMERS PAYING FOR A MUCH LARGER PERMITTED RETURN WHICH INCLUDES GROSS ASSETS NOT YET IN USE OR THOSE USED FOR ELECTRICITY SUPPLY OUTSIDE HONG KONG.

+ IT WOULD SEEM THEREFORE THAT ONLY A PERMITTED RETURN BASED ON FIXED ASSETS WHICH IS REQUIRED AND ACTUALLY IN USE FOR SUPPLYING TO HONG KONG CONSUMERS EXCLUSIVELY WOULD BE A FAIRER FORMULA,+ HE SAID.

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