Clp Tight-Lipped on Source of $460M in Sars Rebates

The rebate will ease the financial burden on two million customers in Kowloon, the New Territories and Lantau to the equivalent of half a March monthly bill. This means non-residential customers will have their June bills credited by up to HK$10,000 and residential customers by up to HK$200.

Jane Lau, a CLP spokeswoman, said the move would cost HK$460 million and would be made possible by savings in the company's core electricity operations.

'The rebate is certainly not funded from the pockets of shareholders,' Ms Lau said.

She said it was premature to say whether the rebate would be financed by the development fund, which had HK$3.37 billion at the end of last year.

'We won't know until the end of this year when we close our books if we need to finance the rebate out of the development fund,' Ms Lau said.

'But for this rebate ... we will forego HK$460 million in income in June by crediting customers' bills.'

However, brokerages Goldman Sachs, HSBC Securities and Nomura Asia Equity Research said the rebate would come from the fund.

Critics said CLP should liquidate the development fund by distributing it back to customers ahead of the expiry of the scheme of control agreement in 2008.

However, CLP managing director Betty Yuen did not say what the company's plan was for the development fund, other than to say it would review the fund's status at the end of the year.

CLP shareholders do not gain from having such a large fund as they are required to pay annual interest of 8 per cent to the fund as part of the scheme of control.

The development fund is a key part of the agreement, which governs CLP and the other power utility, Hongkong Electric.

The agreement allows the firms to earn up to a 15 per cent profit on the average value of their fixed assets in use.

If the companies earn more, they must transfer excess profits to the development fund and in the event of shortfalls, they can draw from the fund.

CLP's profit is expected to remain unchanged due to the scheme of control mechanism.

Still, CLP's Sars rebate will benefit more people than the help being offered by other utilities. Hongkong Electric is facilitating a lending scheme while Hong Kong and China Gas is allowing delayed payments to selected customers.