Secretary for Economic Development & Labour Stephen Ip says the Government's proposal to lower permitted rates of return for the two power companies is reasonable, adding the utilities should consider the present economic situation and public aspiration.

Speaking on a radio talk show this morning, Mr Ip said the stage two consultation on the power market finished last month and about 17,000 position papers were received.

The Government is now analysing the views and will present the results to the Legislative Council at the end of May.

It will also modify its power market proposal according to the results and discuss the issue with the two companies.

Mr Ip is confident an agreement can be reached with the power companies before the existing Scheme of Control Agreements expire in 2008.

No hasty decisions

However, he stressed that it will take some time to conclude the discussion because it involves many complicated issues and both sides should not make any hasty decisions.

The secretary said the Government is assessing China HK Power's application for supplying electricity to Sha Tau Kok residents, adding the company has been asked to submit more information on power supply stability , environmental protection, planning and land use.