TNAG-0767-FCO40-971-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 4

various possibilities of interconnection, and to assess the advantages to consumers and the environmental and any other benefits to be derived from them.

B

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The Working Group has started work and is initially concentrating on establishing the most advantageous method of co-operation and interconnection between the two companies, It is clear however that, given the historical background of the companies, once the technical problems of interconnection have been resolved, there may well still be difficulties in persuading CLP and HEC to co-operate in the future. It would be optimistic to assume that an interconnection between the systems, and a joint development programme, could be agreed and implemented before 1983. A note on the possible degrees of integration between the two companies is at Annex B.

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Meanwhile, it is clear that the future supply of electricity to Hong Kong Island should not be placed at risk, bearing in mind the long lead time for commissioning new generating sets. It is therefore essential that HEC should be granted a site for their two new 250 mw generating sets. Apart from providing the necessary breathing space in which to carry on the discussions with HEC and CLP, there would also be some advantages in having another power station. For example, although CLP's new site at Tap Shek Kok is large and capable of expansion, the site could not be expanded indefinitely except at the expense of a proposed desalter site. There would also be some transmission and distribution problems. From the environmental and security points of view also, it is questionable whether all future generating capacity should be concentrated at one site.

C.S. 166

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However, to emphasise the importance which the Government attaches to attaining co-operation between the genera- ting companies, it is further proposed to inform the companies:

(a)

(b)

that no more separate sites will be granted to either company for a power station. The grant of further land for these purposes would be considered only in the context of a joint development strategy approved by the Government;

that HEC will not be permitted to add further generating sets (i, e. beyond the 2 x 250 mw sets now on order) at their new site, except as part of a joint development programme between the generating companies.

CONFIDENTIAL