ENG-2011 — Page 356

308 The Environment

power

The Government signed post-2008 SCAS with each of the two companies in January 2008. The agreements took effect upon the expiry of the previous ones on September 30, 2008 and December 31, 2008 for CLP Power and HEC respectively. The SCAs are of 10-year term, with an option exercisable by the Government to extend for five more years, i.e. until 2023, after review of the prevailing market conditions.

The permitted rate of return of the power companies on their average net fixed assets is 9.99 per cent. The permitted rate of return is also linked to the emission performance of the power companies in the interest of better environmental protection. The SCAS ensure the continued supply of reliable, safe and efficient electricity at reasonable prices. The Government will proceed with preparations for the opening up of the electricity market, including the formulation of a new market mechanism and the associated regulatory framework, in the current regulatory period (i.e. from 2008 to 2018).

Currently, HEC has a total installed capacity of 3 756 megawatts (MW) at its Lamma Power Station. The Castle Peak Power Company Limited (CAPCO) supplies electricity to CLP Power from its power stations at Black Point (2 500MW), Castle Peak (4 108MW) and Penny's Bay (300MW).

CLP Power and HEC own their respective transmission and distribution systems. The two transmission systems are interconnected by a cross-harbour link, which provides emergency back-up and some sharing of generating capacity reserve between the two systems. The link has a current total capacity of 720 megavoltamperes (MVA).

CLP Power's transmission system is also connected to the electricity network in Guangdong Province which facilitates the export and import of electricity to and from the province. The electricity sold to Guangdong is from CLP Power's existing reserve generating capacity. Its sale is governed by an agreement with the HKSAR Government under which CLP Power's consumers are given priority of supply and 80 per cent of the profit from the sales. At the same time, CLP Power buys about 70 per cent of the power generated by the Guangdong Nuclear Power Station at Daya Bay, which has two 984MW pressurised water reactors, to meet part of the longer- term demand for electricity in its supply area.

According to the memorandum of understanding signed between the HKSAR Government and the National Energy Administration on August 28, 2008, the Central People's Government supported the China Guangdong Nuclear Power Holding Company Limited in the renewal of its supply agreement with Hong Kong for a further term of 20 years. In September 2009, the Government gave approval for CLP Power to extend the contract for the supply of nuclear electricity from Daya Bay Nuclear Power Station for another term of 20 years from May 7, 2014 onwards. The quantity of electricity supply will be no less than the current level.

CLP Power also has the right to use up to 50 per cent of the 1 200MW capacity of Phase 1 of the Guangzhou Pumped Storage Power Station at Conghua. Off-peak period electricity from the CAPCO system and the Guangdong Nuclear Power Station