Job No. 144070 (A)
HANSARD//OCT15:13
106
HONG KONG LEGISLATIVE COUNCIL 15 October 1986
Now to the cost of electricity, members of the public are, of course, concerned that they should pay no more than a reasonable price. Nevertheless, the future requirements for electricity in a continuously growing economy must be met if our industries are to remain viable and living standards are to improve. In practice, the arrangements that are embodied in the Scheme of Control have produced that result and have stood the test of time. We enjoy an electricity supply at a price that compares favourably with that charged elsewhere in the region. Shareholders have received a fair return that has been sufficient to induce continuing investment.
As to the Daya Bay project, throughout its evaluation and consideration our objective was to ensure that at the very least the cost of electricity generated by that station would be no more expensive than electricity generated in Hong Kong by conventional means. We have heard from Dr. Ho Kam-fai and others that nuclear power elsewhere is indeed significantly cheaper. Mrs. Selina Chow please note. Let me restate some of the considerations that were involved in our evaluation and consideration of the project.
First, one of the main considerations that we took into account was the potential cost and financing of a new coal-fired station in Hong Kong. Large sums of money would have been involved and there might well have been difficulties in obtaining investment of that magnitude without considerable financial strain. Indeed, as Mr. S. L. CHEN has pointed out, under the arrangements that have been negotiated, Hong Kong will effectively enjoy the benefits of the nuclear power station without having to find the capital to finance its construction.
Second, as widely pointed out again by Mr. S. L. CHEN, the share of Hong Kong Nuclear Investment Company in the Daya Bay nuclear power station will not constitute part of the CLP group of companies net fixed assets for the purpose of calculating permitted return under the provisions of the Scheme of Control. I think this is the point, Sir, that we will have to explain in far greater detail in the paper and it is my intention so to do.
Third, and perhaps most important from the point of view of the consumer. the prior approval of the Government is required both for any financing plans the company may wish to adopt in relation to any major addition to the company's system and I stress this, the tariffs the company may charge to its
consumers.
Let me explain generally the procedures adopted for agreeing the levels of electricity prices charged by CLP.
In order to establish agreement concerning the levels of projected tariffs a financing review is conducted jointly by the Government and CLP. In the review, a financing plan is submitted for approval by the Executive Council. The review gives projections of CLP's commitments over a five-year period and the level of tariff which needs to be charged to fund those commitments.