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The outbreak of the war in Iran resulted in a spike in oil prices, which remain elevated despite the announcement of a two-week ceasefire.

For cities heavily reliant on energy imports, the challenge is not only to cushion abrupt shocks, but to build a system capable of withstanding sustained impacts. Hong Kong, as an example of such an import-dependent city, has maintained relatively stable tariffs despite global energy price fluctuations.

Although CLP’s fuel cost adjustment charge has increased slightly, compared with major Western cities – such as those in the United Kingdom where residential energy prices are projected to increase by about 20 per cent, and in Australia where electricity and gas prices are expected to jump by 30-40 per cent – Hong Kong’s overall electricity prices have remained comparatively stable.

This is not an accident. It is a testament to the long-standing scheme of control agreements that were designed to manage precisely this kind of uncertainty.

The city’s fuel cost adjustment mechanism allows for cost smoothing over time, helping to prevent sharp short-term electricity price increases. This is just one feature of the scheme of control agreements, which over six decades ago established a long-term, institutionalised cooperative relationship between the government and the two power companies. The agreements promote Hong Kong’s four core energy policy objectives – safety, reliability, affordability and environmental performance – and have guided the city’s low-carbon energy transition with continuous investment from successive governments and industry stakeholders.