Reduced tariffs proposed for selected electricity users

Friday, November 21, 2008
Issue 534, Page 2
Word count: 712
Published in: Macau Daily Times

By Poyi (Natalie) Leung

CEM is proposing a new tariff structure to the SAR government including an up to 15 percent reduction for domestic and small sized enterprises which consume respectively no more than 1,200 kWh and 8,000 kWh of energy per month.

The company yesterday handed in a report about its vision on the future electricity infrastructure in Macau, in which a number of objectives were outlined such as striving for 100 percent reliability of power supply, making the city greener, offering stable tariffs, providing superior customer service and offering fair reward and development opportunities to employees.

According to the research, the average tariff for monthly residential consumption of 500 kWh in Macau is lower than in some other developed cities including Seoul, San Francisco, Tokyo, Singapore and New York.

Franklin Willemyns, the Chief Executive Officer of CEM, said in the press conference that their basic tariffs had already dropped by 47 percent since 1987 and by 19 percent since 2003.

However, Mr Willemyns said the best way to facilitate Macau’s development and at the same time also promote energy conservation is to retain electricity tariffs at “affordable levels for local people”.

In the new tariff structure proposed, domestic customers who use no more than 1,200 kWh of energy in a month and small sized businesses which has a monthly energy consumption of 8,000 kWh below will be able to pay five to 15 percent less of tariffs.

A progressive tariff structure may also be launched in order to further encourage energy saving in Macau.

Meanwhile, CEM planned to expand the discount program dedicated to socially disadvantaged people by removing the application requirement of a 120 kWh limit of energy consumption for six consecutive months.

The abolishment will increase the number of eligible residents to 5,000 who can enjoy a 50 percent discount for a 180 kWh usage per month.

According to the report, between 2003 and 2007 more than 32,000 customers had applied for the special discount, taking up 16 percent of the total number of CEM customers.

This also meant that CEM had received 90 million patacas less in revenue during the last five years.

Mr Willemyns also said that in order to facilitate development especially of small and medium sized enterprises, they suggested to cooperate with the SAR government so as to revise or even exempt connection charges.

CEM is at the same time looking at the possibility of extending the night and day tariffs to other customer groups besides high voltage users.

The CEO told the media yesterday the permitted return for CEM shareholders currently stood at 12 percent, a drop by two percent in 2007 after the mid-term review of the franchise contract.

He added that the company’s net profit margin had reduced by from 31 percent to 13 percent since 1995.

On the other hand, CEM proposed to the SAR government the study of both onshore (on land) and offshore (in the sea) renewable energy as an alternative source of power, even though the “economic efficiency may be marginal”.

Mr Willemyns pointed out that effectiveness of wind and solar energy was suppressed by the climate of Macau and costs of investment.

The company research found that onshore wind power could only generate an extra one to 1.5 megawatts of electricity per year, and not to mention that land resources were limited in Macau, the CEO said.

Offshore wind power generation could provide about 20 megawatts more in a year, however Mr Willemyns said Macau’s wind pattern was not stable enough to ensure adequate power supply.

Meanwhile, he said solar energy might look “very attractive” initially as it was free, but “in reality it needs substantial investment”.

For example in Europe, solar panels of five square metres could generate 500 kWh every year that meant users could save 170 euros. However the CEO said the basic installation cost more than 3,500 euros and hence a payback could only begin in 20 to 25 years.

The report also highlighted the importance of increasing local generation capacity by installing a 365 megawatt clean gas unit in Coloane while maintaining the existing infrastructure on fuel and diesel oil as back up, and also continuing collaboration with Guangdong Power Grid by entering into a long term supply contract instead of in an annual basis.

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