Power bills set to rise as Hong Kong cleans up polluted air

Government suggests buying more mainland electricity or using more natural gas for local production, but both will see costs double

PUBLISHED : Wednesday, 19 March, 2014, 2:15pm
UPDATED : Thursday, 20 March, 2014, 8:58am

Higher electricity bills are in store no matter which of two proposals disclosed yesterday is adopted by the government as part of efforts to clean up the city's air.

Both options - buying more power from the mainland or increasing the proportion of cleaner fuel used by Hong Kong's power stations - would double production costs, environment officials said.

The options were outlined in a consultation paper released by the government yesterday on ways to revamp the "fuel mix" of the city's power supply.

The proposals come against a background of surging power demand, tipped to grow from 43 billion kilowatt-hours in 2012 to 50 billion in 2023.

Meeting this demand would be challenging as an unspecified number of old coal-fired generation units would be phased out, the paper said.

Under one option, known as "grid purchase", up to half the city's power demand would be met by imports from the mainland by 2023. Thirty per cent, or 15 billion kWh, would come from the China Southern Power Grid and the rest from nuclear generation, according to the paper.

The other, dubbed "local generation", would make gas the dominant fuel for power generation, its proportion almost tripling to 60 per cent. The share of coal would be lowered from 53 per cent to almost 20 per cent, with the rest mainly nuclear imports.

Officials said the annual cost of generation under both options would be double the average between 2008 and 2012, but could not estimate at this stage how much charges would have to rise.

They refused to disclose estimates of the investment required in both options as they might "confuse the public", but said the import option might be costlier in terms of capital expenditure, while the local option might expose Hong Kong more to global natural gas price fluctuations.

Environment Secretary Wong Kam-sing said the government would ensure that the price of imported power remained affordable and comparable to that of local power.

"An underlying principle is that the imported price should not be higher than the price of locally generated power," he said, adding that price-setting might involve cross-border governments apart from just the city's two power companies.

Wong dismissed concerns about the unreliability of mainland supplies, saying the imports would account for only about two per cent of the mainland grid's supply.

Officials cited Macau, where 90 per cent of power was from the mainland. The reliability of power in Macau was on a par with Hong Kong's, they said.

But an industry source said the comparison was not accurate, as demand in Hong Kong was greater and the price in Macau was higher. A spokesman for CLP Power said it would provide the public with information about the options to assist discussions and submissions.

"It will be important to make sure that consumers understand the impact on supply reliability and cost implications of the options put forward for the fuel mix," he said.

Hongkong Electric said it "believes it is important to have a clear vision on the future fuel mix for Hong Kong, so as to enable the company to better plan for future development".