CLP warns new carbon law could cloud its results
CLP Holdings, the larger of Hong Kong's two electricity utilities, has warned that its full-year results will be hit by new clean energy laws in Australia.
The Australian Senate yesterday passed a package of bills aimed at cutting carbon emissions by imposing a price on greenhouse gas pollution on July 1 next year in preparation for a carbon-trading system that could begin as early as 2015.
CLP said the new laws might have a significant impact on its wholly-owned subsidiary, TRUenergy, and analysts anticipated it could result in an impairment charge of as much as HK$4 billion.
TRUenergy's profit was HK$1.3 billion last year, while the group earnings were HK$10.33 billion last year.
CLP said it was conducting a detailed study on the impact of the legislation on TRUenergy, particularly a core asset, a brown coal-fired power plant in Yallourn, Victoria.
The company expected the legislation would boost costs for TRUenergy and bring about an impairment to the Yallourn power station. Citigroup analyst Pierre Lau forecast CLP would write down a maximum of one-third of the A$1.71 billion (HK$13.7 billion) book value of the Yallourn power plant as of June 30.
He said CLP would take a conservative stance on the write-down.
Despite the potential write-down, the 1,480 megawatt Yallourn power plant, one of the oldest and biggest coal-fired plants in Australia, may obtain compensation for closing down, pending talks on its fate.
The potential compensation is part of a package of transitional aid that the federal government has offered, and the Yallourn plant is one of three coal-fired plants that qualify for closure and compensation.
During the transition to the new carbon emission regime, some analysts said TRUenergy would be entitled to 25 per cent, or about A$1.37 billion, of the A$5.5 billion package.
TRUenergy stands to be reimbursed with US$250 million in cash in the first year of the five-year transition period.
The utility will also be eligible for 10.42 million carbon trading permits annually for four years, under a carbon trading scheme, from 2013-14.
TRUenergy, which some analysts said could float on the Sydney stock exchange as early as next year, revealed about two weeks ago plans to invest A$3.6 billion in building two gas-fired power plants in Queensland.
CLP shares fell 55 HK cents, or 0.77 per cent, to HK$70.35 yesterday.
$23
The price, in Australian dollars, per tonne of carbon pollution that firms will pay when Australia's carbon tax starts next July
