LettersAmid elevated oil prices, Hong Kong’s stable energy system is a boon
Readers discuss the city’s electricity regime, the significance of Russian oil, and the KMT leader’s visit to mainland China
The outbreak of the war in Iran resulted in a spike in oil prices, which remain elevated despite the announcement of a two-week ceasefire.
For cities heavily reliant on energy imports, the challenge is not only to cushion abrupt shocks, but to build a system capable of withstanding sustained impacts. Hong Kong, as an example of such an import-dependent city, has maintained relatively stable tariffs despite global energy price fluctuations.
This is not an accident. It is a testament to the long-standing scheme of control agreements that were designed to manage precisely this kind of uncertainty.
The city’s fuel cost adjustment mechanism allows for cost smoothing over time, helping to prevent sharp short-term electricity price increases. This is just one feature of the scheme of control agreements, which over six decades ago established a long-term, institutionalised cooperative relationship between the government and the two power companies. The agreements promote Hong Kong’s four core energy policy objectives – safety, reliability, affordability and environmental performance – and have guided the city’s low-carbon energy transition with continuous investment from successive governments and industry stakeholders.