XN000022-1997-02-11 — Page 2

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Govt to examine CLP's proposal on Black Point deferral

The Secretary for Economic Services, Mr Stephen Ip, said today (Tuesday) that the Government needed to examine China Light & Power's (CLP) submission relating to the deferral of generating units 5 to 8 at Black Point Power Station in detail before forming any firm views on it.

Mr Ip stressed that the Government wished to pursue with CLP options which are in the best interests of consumers.

On 5 November 1996, the Executive Council reviewed the electricity generating capacity of CLP and CLP was urged to submit to the Government, by 5 February 1997, a detailed proposal on the deferral of Black Point units 5 to 8, each for five years.

A spokesman for the Economic Services Branch noted that CLP had advised that manufacture of units 5 and 6 was too far advanced to defer, but commissioning of these units could be deferred with additional costs and loss of warranties.

As regards units 7 and 8, CLP had advised that these could be deferred without loss of warranties and with benefits to consumers in the short term. However, CLP felt that the long term costs would outweigh the benefits.

Giving the Government's initial reaction to CLP's response, the spokesman said that CLP's report lacked certain key information to enable the Government to assess whether the company's proposals were in the best interests of consumers.

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CLP said that deferral would result in savings to consumers until at least 2008, yet had chosen to emphasise that deferral would result in additional costs to consumers by the very distant year of 2040. More information was needed on the potential savings to consumers.

CLP had not spelled out the tariff implications of the different options.

The spokesman said that additional information would be sought from CLP and further advice sought from consultants, so as to ensure that any options pursued are in the best interests of consumers.