China must be factor in review of Hong Kong’s electricity scheme

News›Hong Kong

ENERGY

Ada Lee Ada.lee@scmp.com

Developments over border will be considered in the review of electricity firms’ regulation scheme, says deputy minister Christine Loh

Mainland factors will weigh for the first time in the next review of the regulation scheme that covers Hong Kong’s power firms.

Deputy environment minister Christine Loh Kung-wai said yesterday that the city could not lose track of what was happening across the border when it came to energy planning.

“It will be the first time that we take into consideration China development,” Loh told a conference on environmental economics. “What’s happening in Guangdong, we can’t ignore in Hong Kong.”

She said these factors would be given weight when the government started negotiating the companies’ Scheme of Control Agreement in the next two years.

Loh did not say to what extent events in the mainland would shape the review outcome, but elaborated later that Hong Kong – which imports nuclear energy and natural gas from or via the mainland – was connected to the “mainland energy picture”.

“As Hong Kong looks at its energy policy today, we should also consider what is happening on the mainland because China is developing and implementing a vast energy-related policy programme,” Loh said.

Introduced in the 1960s to encourage investment in power facilities amid an industrial boom and growing population, the scheme of control ties the financial return of power firms with their investment. The existing scheme, lasting 10 years, will expire in 2018.

An additional factor that will complicate the renewal will be whether the government opens the power grid to third parties such as mainland power producers, and better integrates the Hong Kong grid with that of Guangdong.

Professor Woo Chi-keung, an energy economist and acting head of Baptist University’s department of economics, said closer grid integration had risks, including the impact of Guangdong’s power shortages.

Local electricity use had not reached the maximum capacity of the two power firms and if the grids were hooked, Hong Kong’s remaining capacity would be “used up in a second”.

Before opening up the local grid to third parties, he said, Hong Kong should consider the cost and benefits to local consumers and whether there would be any environmental impact, as letting the market decide could result in weaker regulations.

William Yu Yuen-ping, chief executive of the World Green Organisation, said Hong Kong needed to co-operate more closely with the mainland on energy issues.

“When we import energy from the mainland, no matter if it is nuclear energy or gas, we need to work with them so that they can plan earlier, too,” he said.

Christine Loh Kung-Wai