HK Electric to hike fuel surcharge by 33.9% from July over ‘deferred effect’ of war in Middle East

HK Electric has said that it will raise its fuel surcharge by 33.9 per cent in July due to what it called the “deferred effect” of the US-Israeli war with Iran.

Hong Kong. File photo: Kyle Lam/HKFP.

HK Electric, one of the city’s two major power utilities, said on Thursday that its Fuel Clause Charge (FCC) will be set at 41.9 cents per unit of electricity from July.

That represents a 33.9 per cent increase from June, when the surcharge – which is set up to reflect energy costs – stood at 31.3 cents.

See also: Middle East war: Cathay Pacific to lower fuel surcharges next Wed as oil prices fall

“Due to the ‘deferred effect,’ the current level has not yet fully reflected the changes in fuel costs,” HK Electric said in a statement. “With the situation in the Middle East remaining uncertain, the FCC is expected to continue to increase in the coming months,” it added.

The city’s other utility giant, CLP Power, has not yet announced its fuel cost surcharges for July. Currently, CLP Power charges 42.6 cents per kilowatt hour of electricity, up from 40.4 cents in May.

The fuel surcharges set by the two electricity companies in Hong Kong are calculated monthly and are adjusted according to the average fuel costs of the preceding three months.

Lamma power station operated by HK Electric. File photo: Tom Grundy/HKFP.

“In other words, the FCC for July is determined based on the average fuel costs of March, April and May this year, at the time when global oil and natural gas prices rose sharply amid the Middle East conflict,” HK Electric said.

Peak expected in August

The US and Israel jointly struck Iran in late February, with the Islamic republic launching retaliatory strikes across Gulf nations. The war effectively closed the Strait of Hormuz, a crucial waterway for global oil supply chains.

Between the start of the war and early June, US President Donald Trump has claimed a deal to end the conflict was imminent at least 38 times, according to CNN.

However, an interim deal has been signed by Washington and Tehran to reopen the strait and extend the current ceasefire by 60 days.

Simon Wong, chair of the Hong Kong government’s Energy Advisory Committee, said last month that the city’s electricity bills will hit a short-term peak in August, after which prices may fluctuate at a high level.

The total electricity costs for residents will be five to 10 per cent higher than before the conflict, Wong said.