138 / 148
THE HONGKONG ELECTRIC COMPANY, LIMITED
TEN-YEAR SCHEME OF CONTROL STATEMENT
138
HK ELECTRIC INVESTMENTS
(a) Scheme of Control
The activities of HK Electric are subject to a Scheme of Control Agreement (“SoCA”) agreed with the Hong Kong SAR
Government with a term of 10 years commencing 1 January 2009 and a Government option to extend the agreement
for a further term of 5 years.
The agreement provides for HK Electric to earn a Permitted Return of 9.99% of average net fixed assets other than for
renewable energy fixed assets for which the Permitted Return is 11%. The Permitted Return is determined after any
excess capacity adjustment, in accordance with the Annex to the SoCA. An excess capacity adjustment of HK$21 million
was made in 2016 (2015: HK$24 million). Any excess or deficiency of the gross tariff revenue over the sum of total
operating costs, Scheme of Control Net Return and Scheme of Control taxation charges is transferred to/(from) a Tariff
Stabilisation Fund from/(to) the statement of profit or loss of HK Electric. When transfer from the Tariff Stabilisation Fund
to the statement of profit or loss is required, the amount transferred shall not exceed the balance of the Tariff Stabilisation
Fund. In calculating the Scheme of Control net revenue, interest relating to the acquisition of fixed assets (whether it
has been charged to revenue or capitalised) up to 8% per annum, is added to, and a tax adjustment is made against,
net revenue after taxation. In addition, each year a charge calculated by applying the average of one-month Hong Kong
Interbank Offered Rate on the average balance of the Tariff Stabilisation Fund is transferred from the statement of profit
or loss of HK Electric to a Rate Reduction Reserve.
(b) Ten-Year Scheme of Control Statement for the year ended 31 December
HK$ million
2016
2015 2014 2013 2012 2011 2010 2009 2008 2007
Sales of electricity
11,373
11,165 11,165 10,176 10,364 10,140 10,338 10,331 12,704 12,452
Transfer from Fuel Clause Recovery Account
1,206
1,861 2,994 3,510 3,867 3,755 2,794 2,329 1,802 413
Other Scheme of Control revenue
79
74
63
67
74 100
62
63
36 455
Gross tariff revenue
12,658
13,100 14,222 13,753 14,305 13,995 13,194 12,723 14,542 13,320
Fuel costs
(3,105)
(3,697) (4,818) (5,271) (5,673) (5,538) (4,570) (4,104) (3,597) (2,167)
Operating costs
(1,460)
(1,277) (1,143)
(995) (1,040) (1,040) (1,097) (1,158) (1,283) (1,260)
Interest
(811)
(838)
(789)
(285)
(264)
(248)
(112)
(91)
(166)
(369)
Depreciation and amortisation
(2,127)
(2,054) (1,988) (1,982) (1,919) (1,836) (1,793) (1,623) (1,516) (2,025)
Net revenue before taxation
5,155
5,234 5,484 5,220 5,409 5,333 5,622 5,747 7,980 7,499
Scheme of Control taxation
(1,209)
(1,140) (1,009)
(988)
(856)
(794)
(930) (1,025) (1,218) (1,331)
Net revenue after taxation
3,946
4,094 4,475 4,232 4,553 4,539 4,692 4,722 6,762 6,168
Interest on borrowed capital
821
729 690 288 271 239 118 103 154 307
Interest on incremental customers’ deposits
–
–
–
–
–
–
–
–
1
9
Scheme of Control net revenue
4,767
4,823 5,165 4,520 4,824 4,778 4,810 4,825 6,917 6,484
Transfer from/(to) Tariff Stabilisation Fund
181
84 (249)
389
72
46
(58)
(174)
(297)
(14)
Permitted return
4,948
4,907 4,916 4,909 4,896 4,824 4,752 4,651 6,620 6,470
Interest on borrowed capital
(821)
(729)
(690)
(288)
(271)
(239)
(118)
(103)
(154)
(307)
Interest on incremental customers’ deposits
–
–
–
–
–
–
–
–
(1)
(9)
Transfer to Smart Power Fund
(5)
(5)
(10)
–
–
–
–
–
–
–
Transfer to Rate Reduction Reserve
(1)
(1)
–
(1)
(1)
(1)
(1)
–
(13)
(1)
Net return
4,121
4,172 4,216 4,620 4,624 4,584 4,633 4,548 6,452 6,153