CLP chief urges proper balance on fuel mix for power utilities

May 09, 2014 12:31
Kadoorie feels that over the long run it might be cheaper for Hong Kong to import power from the mainland rather than import natural gas and use it for power generation locally. Photo: Bloomberg

CLP Holdings (00002.HK) chairman Michael Kadoorie has urged the Hong Kong government to carefully consider the long-term value to the city in deciding the fuel mix for local power utilities in the coming years. 

The government is currently seeking public opinions on two proposals that may determine the new fuel mix for the city's power sector.

Kadoorie said the final decision should strike a balance on reliability, environmental management and tariff levels, while also taking into account the city's goal to control its own infrastructure, the Hong Kong Economic Journal reported Friday. CLP is open to any proposals, Kadoorie said.

The company, however, sought to dispel a "general misunderstanding" that purchasing electricity from the mainland would jack up the tariffs. CLP's rates are similar to the tariff levels across the Pearl River Delta, said Betty Yuen, vice chairman of CLP Power Hong Kong.

She said the two proposals in consultation possess different advantages.

CLP Holdings chief executive Richard Lancaster said buying power from the mainland could cost less over long run, compared to the cost of importing natural gas and using it for power generation locally. Constructing power networks for the import of electricity may cost a few dozen billion Hong Kong dollars that can be amortized over a period of 40 to 50 years.

Meanwhile, purchasing natural gas to generate 40 percent of the city's power needs will cost over HK$10 billion a year, meaning higher expense over the long run.

The industry veteran also defended the reliability of power supply from the mainland, noting data in relation to the company's purchase of electricity from Daya Bay over the last two decades that has contributed 30 percent of the company's supply in Hong Kong.

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