Abstract :
The current regulatory contract between the Hong Kong Government and the two local power suppliers will expire in 2008. To elicit constructive ways to refine this regulatory contract upon its expiration in two years, the Hong Kong Government recently issued a public consultation paper. An earlier viewpoint by Woo, Horowitz and Tishler (2006) warns that if the proposals provided in this consultation paper are fully adopted, it will do more harm than benefiting the industry. While its concern is valid, that viewpoint has not suggested specific improvements of the existing arrangement, and how incumbent firms’ incentives to invest will not be harmed under the new arrangement. Hence, this viewpoint contributes to Hong Kong electricity policy debate by filling this gap, with the hope of aiding the regulator to better regulate the market in the years after the current contractʹs expiration.
