SCMP: 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.

Against rising global energy uncertainty, Hong Kong, with its sound regulatory system and robust oversight, has established predictable operating conditions for its energy system. This provides a stable environment for long-term investment by power companies and is particularly important for an economy primarily based on finance and services, enabling stable internal system operation despite external markets fluctuations and playing a crucial role in overall economic confidence.

The current conflict also reminds us of the importance of maintaining a strong societal consensus around energy policy. Hong Kong’s energy system has benefited from decades of coordinated efforts by stakeholders across the institutional, infrastructure and operational domains, enabling the consistent meeting of the energy policy objectives. In the wake of geopolitical impacts to the energy supply chain, the ability of energy systems to withstand shocks, adjust rapidly and maintain operations becomes increasingly important.

The conflict in the Middle East is a stark reminder that we cannot take stable energy prices for granted. Hong Kong’s energy system and resultant stability and predictability are thanks to the commitment of previous stakeholders and governments. We must continue their work to maintain a resilient, future-ready energy system.

Originally published on SCMP on 17 Apr 2026. Written by Chloe Chan and Wing Tsang.