The Executive Council has approved the Hongkong Electric Company's new five-year development plan, for 2009 to 2013.

The company will cut its average basic tariff by 19.2% or 22.4 cents per kilowatt hour  - but increase the fuel-clause charge by 14.9 cents/kWh - on January 1.

As a result, the average net tariff will be reduced by 7.5 cents/kWh, from the current rate of 127.4 cents/kWh to 119.9 cents/kWh, a 5.9% drop from its current level. 

The company projected, on average, a decrease in basic tariff each year over the development-plan period as compared with current level.

Secretary for the Environment Edward Yau today said the Government has persuaded the company to draw down its tariff stabilisation fund balance to reduce tariffs in the development-plan period.

The company also agreed to reduce its originally proposed capital spending in the development-plan period by about 30%, to $12.3 billion.

Taking into account inflation, the total capital expenditure in the 2009-2013 plan is, in real terms, lower than that under the last financial plan.

"The Government will monitor the performance of the company through the annual auditing review and tariff review to ensure that the public can continue to enjoy reliable, safe and efficient electricity supply at reasonable costs," Mr Yau said.