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Govt & CLP reached agreement over Black Point deferral
The Secretary for Economic Services, Mr Stephen Ip, today (Monday) welcomed the agreement reached between the Government and China Light and Power (CLP) on measures to tackle high reserve margin in the CLP system.
Mr Ip said that the arrangement was reasonable and would be beneficial to He was glad that CLP had acted towards the issue in a responsible
consumers.
manner.
Mr Ip was content that CLP had agreed to defer generating units 7 and 8 at Black Point for up to five years if the situation requires.
He said the Government would review the situation with the company in 1999 based on the demand forecast at the time. A 5-year deferral of units 7 and 8 will bring net benefits to consumers both in the short and long term.
According to the Government's consultant, the benefits from the deferral could be as high as $478 million during the life of the project up to the year 2032.
China Light and Power has also agreed to shortly decommission 442 MW of existing gas turbine capacity and to put the gas turbines into preservation.
The decommissioning of gas turbines will immediately hold down the reserve margin by 10%.
Upon decommissioning, the remaining book value of the turbines will be written off and no permitted return will be earned. This alone will bring benefits of $119 million to consumers.
China Light and Power and the Government will review in 1999 whether the turbines should be disposed of permanently, be recommissioned or continue to be preserved.
Mr Ip noted that the Black Point generating units 5 and 6 are too advanced. He agreed that it is neither practicable nor economically justifiable to defer them. Unit 5 has already been delivered and Unit 6 will soon be ready for delivery.
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