Hong Kong will consider opening up the electricity market to more competition as a possible measure to stabilise tariff prices following an outcry over recent increases, the environment minister has said.

Secretary for Environment and Ecology Tse Chin-wan on Sunday conceded that increased competition could destabilise the power supply if any of the firms failed to survive, but that would not exclude considerations for expanding the current duopoly over the city’s electricity market in the future.

“Our Scheme of Control Agreement is not a patent. We will think about how we should proceed under this agreement, and consider all methods to see if we can enable Hong Kong’s electricity tariffs to drop,” Tse said in a television interview.

Tse was referring to a deal between the government and the city’s two suppliers, CLP Power and HK Electric, where a contract renewed in 2018 granted the firms an annual return of 8 per cent until 2033.

Politicians have urged the government to review its contract terms with the firms next year, after learning residents would be paying CLP Power 19.8 per cent more and HK Electric an additional 45.6 per cent year on year by January, after taking into account the monthly rise in fuel charges.

William Yu Yuen-ping of NGO World Green Organisation said energy market reforms were an international trend, but Hong Kong should beware of allowing in too many players and diluting service quality.

“There is a need to introduce competition, but because the market is too small and the industry concentration too low, it cannot accommodate too many players,” said Yu, an energy economist.

“In principle, increasing competition should yield better service and reduce costs, but how to implement that to avoid the situation overseas, where in the end firms were unwilling to invest in repairs, which caused the quality of service to suffer with frequent outages [is the issue].”

CLP Power announced it would keep its basic tariff unchanged for a third consecutive year at 93.7 HK cents (12 US cents) per kilowatt-hour, but it would increase its fuel charge to 62 cents per kWh. Taking existing rebates into account, bills in January would be 6.4 per cent higher than in November.

HK Electric, meanwhile, said it would increase its basic rate by 5 per cent to 114.5 cents per kWh, and raise the fuel charge to 82.5 cents per kWh, up 3.7 per cent, which would amount to an overall increase of 5.5 per cent next year.