Scheme of Control Agreement: Understanding Hong Kong`s Electric System

Hong Kong`s electric power industry is regulated by the Scheme of Control Agreement (SCA). This agreement sets out the regulatory framework for Hong Kong`s two power companies – CLP Power Hong Kong Limited (CLP) and The Hongkong Electric Company Limited (HK Electric).

The SCA is a crucial agreement for Hong Kong`s power industry as it sets out the terms and conditions of electricity supply, which are subject to review from time to time. Under this agreement, CLP and HK Electric are required to provide a stable and secure supply of electricity to Hong Kong`s consumers at a reasonable price.

The agreement is signed between the Hong Kong Government and the two power companies and is designed to promote the reliable and efficient supply of electricity in Hong Kong. It also ensures that the companies invest in their infrastructure to maintain and improve the quality of the supply.

The SCA also sets out the level of tariff regulation that the companies must follow. The Hong Kong government regulates the electricity tariffs based on a fixed rate of return on the companies` investments in their infrastructure. This ensures that the electricity tariffs remain affordable for the people of Hong Kong, while also providing a reasonable return to the companies.

The SCA also includes provisions for the companies to implement energy-saving measures and promote the use of renewable energy. Both CLP and HK Electric are required to implement energy-saving measures to reduce their consumption of fossil fuels and promote the use of renewable energy sources.

In summary, the Scheme of Control Agreement is a vital agreement that regulates Hong Kong`s electric power industry. It ensures that the power companies provide a reliable and secure supply of electricity to the people of Hong Kong at a reasonable price while promoting energy-saving measures and the use of renewable energy.

As Hong Kong continues to grow and develop, the SCA will play an increasingly important role in ensuring that the city`s energy needs are met in a sustainable and responsible manner.