Regulatory effects on electricity prices in Hong Kong

In Hong Kong, electricity is supplied by two investor-owned utilities: China Light and Power Company Limited (CLP) and the Hongkong Electric Company Limited (HEC). These two utilities operate under a special regulatory arrangement known as the Scheme of Control, which was proposed by the industry in 1964. The objective of this paper is to evaluate whether the Scheme of Control has fulfilled its original intention of protecting both the producer’s right to serve and the consumer’s right to be served. Our empirical results have indicated that the first Scheme of Control (1964–1978) had a greater effect on reducing electricity prices than the second one (1979–1992).