With the development of the SSEZ the demand for electricity is increasing beyond the capability of GPC to meet it. Despite the present supply from CLP, GPC are already having to ration electricity. As the existing infrastructure for distributing electricity in the SSEZ is inadequate the problem cannot be overcome simply by CLP supplying more power to GPC. The Chairman of CLP believes that it would probably be necessary for CLP to help GPC to set up a distribution system, and perhaps to assist with maintenance, accounting and other matters. Because of the lack of local expertise, CLP might eventually be obliged to assume responsibility for all aspects of distribution, in effect to extend their area of supply to cover the whole of the SSEZ. The implications of such an extension cannot be properly assessed in the absence of a detailed proposal, but if such an arrangement were acceptable to the Chinese authorities there would seem to be no reason in principle why it should not also be acceptable to Hong Kong provided that no subsidy by Hong Kong consumers was involved.
13
Although it has yet to receive estimates of demand from GPC, CLP suspects that in the first and second years of the situation envisaged in the preceding paragraph it would be able to meet demand from the SSEZ from existing capacity. After that CLP would probably have to consider other means of supplying the demand and if it became necessary to provide additional capacity not required to meet demand in Hong Kong CLP would have to ensure that the full cost was met by Shenzhen consumers.
Implications for the CLP Scheme of Control
14
Provided supplies sold to China could be met from capacity needed to meet demand in Hong Kong, and revenue from sales to China was brought to account in assessing CLP's profit, the principles of the scheme of control would not be undermined. If the situation changed the Government would discuss the implications with CLP to ensure that consumers in Hong Kong continued to pay for no more than the cost of meeting demand in Hong Kong including CLP's permitted return based only on the value of those assets necessary to supply consumers in Hong Kong.
Conclusion
15
The Chairman of CLP has advised that, providing the Hong Kong Government has no objections, his company will agree to the request to supply electricity to Shekou, in the knowledge that this might lead to further requests which would be difficult to refuse.
CONFIDENTIAL **