HONG KONG LEGISLATIVE COUNCIL 15 October 1986
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Clearly there must be installed sufficient generating plant to keep pace with expected demand for electricity. As the demand for electricity continues to grow CLP must maintain and operate existing power plants and provide for additional capacity as required. The need for such plant is directly related to forecasts of demand. These forecasts are examined and confirmed independently of CLP, so that the Government can ensure that the right amount of capital investment is made in a timely manner.
I am aware, Sir, that Members of this Council and, indeed, members of the public wish to know how the purchase of electricity from the Daya Bay station will be dealt with in calculating or computing the tariff charged by CLP. We will give details in the paper that I shall be issuing. Briefly, nuclear power purchased by CLP will, for Scheme of Control purposes, be treated like any other purchase made by the company in the process of providing its consumers with electricity. That is, it will be considered in exactly the same way as the purchase of coal, oil, or indeed electricity purchased from the Hongkong Electric Company.
In order to ensure that consumers enjoy a reliable and reasonably priced supply of electricity, accurate forecasts of the future demand for electricity are essential. I concede that an over-estimate is as undesirable as an under-estimate, although it is the latter that could prejudice the reliability of the system. Given the dependence of Hong Kong's economy on a reliable electricity supply, it is probably safer to err on the side of over-capacity rather than under-capacity notwithstanding the undesirability of either situation. But we try to get it right.
The lead time for the construction of a new power station is normally about seven years, so forecasts for planning purposes have to cover at least that time frame. Looking into the future is not an easy task. CLP's forecasts have nevertheless proved remarkably accurate. For example, the projections they made in 1977 for 1985 and 1986, that is, looking-at that time-eight or nine years into the future, were only 2.2 per cent and 5.6 per cent in error. In fact, sales turned out to be slightly higher than those forecasts. I should add at this point that CLP's consumers' demand has grown at an average rate of 10.1 per cent per annum in the last 10 years. Whilst this high rate is not expected to continue over the next decade, nevertheless a growth rate of approximately 7 per cent is expected.
I turn now to the reasons why the nuclear option was chosen. Following a comprehensive joint feasibility study undertaken by CLP and the Guangdong Power Corporation it was concluded that the joint development of a nuclear power station in Guangdong was both technically and financially feasible. Members will recall that after carefully considering the proposals that had been formulated in respect of the project, I announced to this Council that, subject to a satisfactory resolution of the fiscal and commercial terms for the project, the Government supported the participation of Hong Kong interests in the joint venture project and reaffirmed that it would not object to CLP purchasing power from the nuclear plant.
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