XN000022-1983-08-18 — Page 2

THURSDAY, AUGUST 18, 1983

POWER COMPANIES PLANS WELL FOUNDED

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CONSULTANTS

BURNS AND ROE, INC., THE CONSULTING FIRM APPOINTED TO ADVISE THE GOVERNMENT ON THE TECHNICAL ASPECTS OF POWER GENERATION BY THE TWO MAJOR POWER COMPANIES - NAMELY CHINA LIGHT AND HONKONG ELECTRIC, HAVE CONCLUDED IN THEIR REPORT THAT THE GENERATION EXPANSION PLANS OF BOTH COMPANIES HAVE BEEN FOUNDED ON GOOD ENGINEERING PRACTICES AND SOUND ECONOMIC JUDGEMENT.

IN THE CONSULTANTS' VIEW, THESE EXPANSION PLANS ARE SUFFICIENTLY FLEXIBLE TO ALLOW FOR CHANGES IN ECONOMIC CONDITIONS WITHOUT THE RISK OF OVER-PROVISION OF GENERATING CAPACITY.

A GOVERNMENT SPOKESMAN SAID THAT THE CONSULTANTS, WHO ARE WELL-ESTABLISHED IN THE ENGINEERING CONSULTANCY FIELD" IN THE USA, HAD BEEN ENGAGED IN MARCH LAST YEAR TO PROVIDE SPECIALIST ADVICE TO THE GOVERNMENT ON AN ASSIGNMENT BASIS FOR A PERIOD OF THREE YEARS.

THE FIRST OF THEIR REPORTS WAS SUBMITTED IN APRIL THIS YEAR AND AN EXECUTIVE SUMMARY OF ITS FINDINGS AND RECOMMENDATIONS IS PUBLISHED TODAY.

IN THIS FIRST ASSIGNMENT, THE CONSULTANTS WERE ASKED TO ASSESS A NUMBER OF TECHNICAL FEATURES OF THE FINANCIAL PLANS OF THE COMPANIES, INCLUDING THE SUITABILITY OF THE METHODS USED BY THE COMPANIES TO ESTIMATE GENERATING CAPACITY, AND THE SUITABILITY -

- OF THE IR GENERATING IN TERMS OF TYPE, NUMBER, SIZE AND EFFICIENCY PLANT.

IN ADDITION TO THE CONCLUSION THAT THE COMPANIES' GENERATING EXPANSION PLANS WERE WELL DRAWN UP, THE CONSULTANTS ALSO ENDORSED IN RETROSPECT THE DECISIONS BY THE COMPANIES IN THE MID-1970'S TO INSTALL GENERATING UNITS WHICH CAN USE THE CHEAPER FUEL, COAL, AS WELL AS OIL. SOME OF THESE DUAL-FUEL UNITS HAVE ALREADY BEEN COMMISSIONED AND ARE ALREADY PRODUCING SAVINGS IN FUEL COSTS.

BOTH COMPANIES AND CONSUMERS ARE ALSO BENEFITING FROM THE INTERCONNECTION BETWEEN CLP'S AND HEC'S SUPPLY SYSTEMS WHICH WAS BROUGHT ABOUT WITH THE ACTIVE ENCOURAGEMENT OF THE GOVERNMENT.

IN THEIR CONCLUSIONS, THE CONSULTANTS NOTED THAT AMONG OTHER BENEFITS THE INTERCONNECTION FACILITY HAD INCREASED THE RELIABILITY OF POWER SUPPLY, AND ALLOWED THE DEFERMENT OF SIGNIFICANT CAPITAL EXPENDITURE.

THE CONSULTANTS CONSIDERED THAT OTHER ASPECTS OF THE TWO POWER COMPANIES' TECHNICAL PLANNING AND PERFORMANCE WERE GENERALLY SATISFACTORY. A GOVERNMENT SPOKESMAN ADDED THAT THE CONSULTANTS' RECOMMENDATIONS HAD BEEN DISCUSSED WITH AND WELL RECEIVED BY THE COMPANIES.

THE CONSULTANTS WILL NOW BE ASKED TO REPORT ON OTHER TECHNICAL ASPECTS OF POWER GENERATION, SUCH AS WHETHER IT IS FEASIBLE AND DESIRABLE TO UPGRADE THE VOLTAGE OF POWER SUPPLY TO CONSUMERS.

A SUMMARY OF THE CONSULTANTS* CONCLUSIONS AND RECOMMENDATIONS FOLLOWS THIS RELEASE.

SULVARY OF