CHINA LIGHT & POWER COMPANY LTD.
SCHEME OF CONTROL
Annex C
The
In
China Light recognize their continuing obligation to contribute to the development of the Colony of Hong Kong by providing substantial additional facilities to meet the rapidly increasing demand for electric power. pursuit of this objective China Light have associated with Esso to form a hev Company which will construct additional generating capacity. Government of llong Kong recognize that these companies and their share- holders are entitled to earn a return which is reasonable in relation to the risks involved and the capital invested in and retained in the siness. In return, the Government of Hong Kong wish to be assured that service to the consuming public is adequate to meet demand, efficient ad of high quality, and is provided at the lowest cost which is reasonable
the light of financial and other considerations.
recognition of the above, China Light and Esso have jointly developed ocedures to govern the financial affairs of the two companies as bllows:
1,
Tariff Limitation
1.
B.
2.
3.
China Light undertake to distribute electric power within an "Inicial Tariff" structure which incorporates modifications to the present China Light tariff structure which will reduce aggregate revenues by approximately HK$5.0 million in the first
This year and a further IIK$6.0 million in the second year. tariff structure will be subject to escalation to cover changes in the Hong Kong dollar cost of plant and equipment, as well as other local costs, including wages (provisions governing escalation shall be more fully set forth in a separate memorandum). Provision will remain in the China Light revenue system for adjusting charges to offset changes in the price of fuel.
If it is deemed necessary to adjust tariff schedules under the above escalation provision, China Light agree that they will consult with the Government of Hong Kong prior to making such adjustments.
A
China Light agree that they will not increase the average tariff above the composite level which results after the two successive reductions discussed in (1) above for any reason other than those set forth above without first reviewing with the Government the terms of the Schene of Control presented herein. ́
Allocation of Tariff Income
1.
Earnings to the extent of 12.5 per cent after tax of the
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