C.S. 166

CONFIDENTIAL #

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XCC(77)87

Cost of Capital Expansion

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9

The revised estimate of total cost, shown in Table III below,

is 13% higher than that set out in paragraph 9 of Annex A to memorandum XCC(77)86.

Table III

Generation

Transmission

Year

Land

(including

and Buildings) Distribution

Total

$ M

$M

$M

$M

1977

42

169

211

1978

160

73

230

463

1979

27

80

248

355

1980

27

444

417

888

1981

932

700

1,632

1982

886

385

1, 271

1983

549

718

1, 267

1984

313

410

723

1985

409

388

797

1986

141

325

466

1987

3 48

348

214

3,869

4,338

8, 421

The main reasons for this are that:

10

(a)

(b)

the original transmission and distribution costs have increased by $730m because:

(i)

(ii)

there is extra expenditure ($370m) associated with the Lantau site as compared with a main- land site originally envisaged; and

about $360m is needed for additional items considered necessary following the compilation of a detailed transmission and distribution development plan;

generation cost increases of $200m arise from the need for the additional gas turbine capacity (see paragraph 8(b)) and a further $160m increase is accounted for by the DOI package being higher than CLP's original estimate.

The cost of land used for the purposes of estimating total cost is the very rough average price of $55 per square foot overall (for land formed), indicated to CLP recently, which is somewhat lower than the price used in Annex A to memorandum XCC(77)86.

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