Legislative Council Panel on Economic Services



This paper addresses the requests for further information made by Members when they discussed the proposal by the Hongkong Electric Company Limited (HEC) to build additional electricity generating capacity at Lamma Power Station on 26 October 1998.

Information requested

The feasibility of the following proposals and the respective stances of the Government and the power companies on these proposals:
  • selling of natural gas supply already secured by CLP to HEC

  • selling of CLP Black Point Units 7 and 8 to HEC at competitive price

  • buying of electricity by HEC from CLP

  • buying of electricity by HEC from Guangdong
2.These proposals envisage commercial decisions and specific contractual arrangements negotiated between private sector interests. The policy of the Government is to leave business decisions to businessmen. However, should a company approach the Government with a proposal of this nature, it will be given full consideration having regard in particular to the potential benefits to consumers and security of supply and environmental considerations.

3.The following points are also relevant :
  • We understand that CLP's natural gas supply is being fully utilised by the company for power generation.

  • We have agreed with CLP that they should defer the installation of CLP Black Point units 7 and 8. The timing of installation will be reviewed in the fourth quarter of 1999.

  • We have established that extended transfer of power from CLP to HEC will require the construction of an additional interconnector.

  • We understand that Guangdong will need additional generation capacity to meet their demand growth after 2003.
4.The buying and selling of electricity between power companies operating in Hong Kong is being considered in a broader policy context in the Government's on-going study of interconnection and competition in the electricity supply sector. The report of the study will be made available for public comments in due course.

The forecast reserve capacity of HEC at 2003.

5.The forecast reserve margin of HEC at 2003 is, as advised by the company, 20.6%. We are examining the company's forecast of maximum demand and the related reserve margins as part of our study of the company's Financing Plan for 1998 to 2003.

The selection criteria for appointing consultants to examine HEC's generation development proposals and whether the Administration was prepared to release the findings of the consultancy study and to conduct a public consultation exercise including the Legislative Council before a decision was made by the Executive Council.

6.The selection criteria for appointing consultants to examine HEC's generation development proposals are the standard criteria adopted by the Engineering and Associated Consultants Selection Board. They include the consultants' relevant experience, the quality of their response to the brief, their proposed methodology and approach and the qualifications and experience of the staff assigned to the work.

7.The findings of the consultancy study on HEC's generation development proposals will be released in due course.

8.The HEC's proposals have been discussed at two District Boards and in the relevant LegCo panels. The Advisory Council on the Environment and the Energy Advisory Committee will also be consulted. Those interested in HEC's proposals are welcome to forward their views to the Economic Services Bureau. We will take into account these views in considering the HEC proposals.

Economic Services Bureau
November 1998