A CONSUMER Council proposal to impose price controls on Towngas, used for cooking food and heating water by about 1.1 million households, was rejected yesterday by the Government.
Ruling out regulation as 'undue government interference', it instead required Towngas, the trading name of the Hong Kong and China Gas Company, to justify any tariff increases.
The supplier agreed to consult the Government and brief the Legislative Council on rises, said Economic Services Branch Deputy Secretary Leo Kwan Wing-wah.
In its response to the Consumer Council's report on competition in the water heating and cooking fuel market, the Government: Agreed to study the council's recommendation for a 'common carrier' gas distribution system operated by a separate company and piping gas from a number of suppliers to promote competition; Indicated its willingness to consider private sector proposals for natural gas - which is cheaper, safer, non-toxic and environmentally friendly - but did not pick up on a proposal to set up a pilot project; and Rejected the council's proposal to set up an Energy Commission to regulate the energy industry but agreed to create an Energy Advisory Committee to guide policy and later review the need for a commission.
Justifying its rejection of regulation, the Government said its rates of return were in line with the two electric power companies, which are regulated.
It rejected the council's allegation Towngas enjoyed 'excessive profits' or 'monopolistic profit' because of a lack of competition.
The council calculated the cost savings which could have been returned to consumers from competition were up to $87 million in 1994.
