MR CHAN KIN-POR (in Cantonese): Thank you, Deputy President. Hong Kong is a cosmopolitan city and an international financial centre, and maintaining stable and reliable electricity supply is vitally important to economic development and to ensuring that the people can live in contentment. The electricity supply in Hong Kong is basically safe, stable and reliable, and the power companies are providing high-quality services, but electricity tariffs have been surging continuously. In recent years, all increases in fuel costs have been passed on directly to consumers, adding to the burden of the public and small businesses. To stabilize electricity tariffs, the community has proposed various solutions, and the most direct and effective way is to import electricity from the Mainland.
I am grateful to Mr LUK Chung-hung for proposing today’s motion, which allows us to discuss issues relating to the electricity market. In fact, there is nothing wrong in adopting a franchise model for the operation of the electricity market in Hong Kong, given the small size of the market. But there are indeed many problems with the current operational and regulatory framework, and as Members have discussed it at length, I will not repeat their points here.
I believe that the Government will attach great importance to the various issues raised and will conduct a thorough study during the forthcoming interim review, covering issues such as the maximum permitted return, the asset investment ratio and the Fuel Cost Adjustment. Of course, the Government will do its utmost in the negotiations, but it should convince the two power companies with good reasons, because any changes to the terms and conditions must be agreed upon by both parties in accordance with the current agreements. However, in my view, there are several principles that should be followed in tandem with the review: first, stabilizing tariffs should be given first priority in implementing all measures; second, no measures should be taken at the expense of safety, stability and reliability; and third, while stabilizing electricity tariffs, consideration should be given to the contractual spirit, which is highly valued by Hong Kong’s business community, and the reasonable interests of the power companies. As electricity supply requires intensive capital investment, if the interests of investors are neglected, probably no one will be willing to invest at the end of the day, and this may, in turn, jeopardize the long-term safety and stability of electricity supply. I put forward these principles in the hope of finding a win-win solution for society. Only when there is a win-win situation in society will Hong Kong have a chance to win.
Due to the time constraints, I will focus on the issue of importing electricity from the Mainland. At present, a total of 25% of Hong Kong’s electricity is imported from the Mainland, and the Government hopes to increase it to 35% by 2025. The Government has earmarked the Tseung Kwan O Area 132 for the construction of electricity facilities to strengthen cross-boundary electricity transmission. News has it that upon completion of these facilities in 2035, the proportion of electricity imported from the Mainland will increase significantly to 70%. Currently, the electricity supplied to Hong Kong from the Mainland is nuclear electricity imported by CLP Power Hong Kong Limited (“CLP”) from the Daya Bay Nuclear Power Station. Nuclear electricity is cheaper than natural gas-fired electricity, which is why CLP charges less than The Hongkong Electric Company, Limited (“HEC”).
In fact, there is a significant difference between the electricity tariffs charged by CLP and HEC. Some media have made calculations and found that HEC’s net tariff is 32% higher than that of CLP, but the calculation of electricity tariffs is very complicated. Colleagues in my Member’s office once visited the websites of the two power companies, using the electricity tariff calculators at the websites to study the tariffs. Calculations were made on the basis of the electricity consumption of a general household, and it was found that HEC still charged 9.6% to 22% higher than CLP, which is extremely undesirable even though the difference is not as strikingly obvious as in the net tariffs.
The difference in the electricity tariffs of the two power companies actually reflects the difference in their generation costs. CLP’s lower electricity tariff is largely due to the fact that 36% of its electricity mix is nuclear electricity imported from the Daya Bay Nuclear Power Station. In contrast, HEC does not import any electricity from outside Hong Kong at all and 100% of its electricity is generated from natural gas and coal, thus resulting in the difference in electricity tariffs between the two power companies.
In fact, China is the world’s largest user of renewable energy for electricity generation, and it also uses nuclear power for electricity generation. Guangdong Province currently has four nuclear power stations in operation, and several more are under construction. With the further integration of the Guangdong-Hong Kong-Macao Greater Bay Area, I think the import of more electricity from Guangdong Province will certainly be a direction for Hong Kong. As the cost of generating electricity from renewable energy in the country is quite high and may not be lower than the generation costs in Hong Kong, the import of nuclear electricity is a more viable option for Hong Kong. The nuclear power stations in Guangdong Province have adopted state-of-the-art technology and the most stringent management approaches. It is proven to be safe, reliable and better still, inexpensive with good quality.
Overall, importing electricity can effectively stabilize electricity tariffs. The Government has planned to increase electricity imports over the next two years. I hope that the new electricity imports can be allocated to HEC as far as possible to help it reduce its electricity tariffs. As the power networks of the two power companies are already interconnected, there should be no major technical problems. Besides, the Government should expeditiously approve the construction of cross-boundary electricity transmission facilities in Tseung Kwan O and strive for their early completion. Of course, the Government should also resolve the misgivings or difficulties faced by the residents in the district, so that Hong Kong people can enjoy inexpensive and quality electricity supply as soon as possible.
Thank you, Deputy President.