XN000022-1996-02-12 — Page 3

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However, the Government notes that it is likely the company will increase its dominance of the domestic gas market and that this could generate further unease in the community.

The Government therefore wants a formal agreement with the company to increase transparency of its tariff-setting mechanism and justification for tariff increases through special consultation arrangements.

"The gas company has indicated support in principle to this proposal and has volunteered to consult the Government on its tariff increases in future and to brief members of the LegCo Economic Services Panel," Mr Kwan said.

On the recommendation that a co-ordinated energy policy be formulated and an Energy Commission be established to co-ordinate, monitor and regulate the energy industry and advise the Government on energy policy, the Administration considers that immediate creation of an Energy Commission is not warranted.

Instead, the Government proposes that an Energy Advisory Committee be set up this year to advise the Administration on energy policy and other related matters referred to it by the Government and that the new committee will absorb the functions of the existing Energy Efficiency Advisory Committee.

The Government's response also addresses other recommendations made by the Consumer Council in its report.

One of them was that the gas distribution network should be opened up for the use of different gas suppliers through a "common carrier" system, so as to increase competition in the market.

The idea is that different suppliers of the same type of gas can supply customers through a shared distribution network, possibly through licensed gas retailers.

Noting that the system is used overseas for industrial consumers, the Government said it was untried for domestic consumers but the United Kingdom would start a pilot project soon and the Government would study the feasibility of introducing a common carrier system in Hong Kong.

Meanwhile, the Government also expresses support for the idea that industry players should be encouraged to bring natural gas to Hong Kong and will study any such proposals by the private sector.