Anson Chan Fang On-sang denied yesterday that she had misled Executive Councillors into approving construction of an unnecessary power plant. She said approval had been based on forecasts of electricity demand by China Light & Power (CLP), now CLP Power, which had proved wrong. Mrs Chan, Chief Secretary for Administration, was testifying to legislators on a report by the Audit Commission, which criticised the building of the $24 billion Black Point plant. The commission said Executive Councillors had approved the plant in 1992 without seeing 'low-growth scenario' forecasts. It said construction of the plant meant CLP had overcharged customers $3.4 billion between 1996 and 1998. The firm has denied the claim. Under a deal with the Government, the power firm is allowed to set charges to maintain a 13 per cent profit on fixed assets - in effect, the power stations. In simple terms, the more power stations it builds, the more it can charge. Mrs Chan, who as then Secretary for Economic Services was responsible for the power plant issue, told the Public Accounts Committee yesterday that the Government's economist and consultant had agreed with CLP's forecast of an annual maximum growth rate in demand for electricity of 7.6 per cent between 1992 and 1997. Actual growth was 3.3 per cent. The firm's 'low-growth' forecast was 5.3 per cent. Mrs Chan said the growth in demand in the previous 10 years, the periodic slowdowns in the economy, the mainland's economic readjustment and the Gulf War had been considered. 'After taking into account all the factors, we found CLP plan was the best option,' Mrs Chan said. She said there was a risk of a blackout if supply had been underestimated. 'Forecasting is not an exact science. It was difficult to make a 100 per cent accurate prediction.' The forecasts proved wrong because of the massive shift of factories to the mainland. Mrs Chan said the Government had only been aware of the speed of the relocation after 1992. But in an earlier committee hearing, legislators pointed out that CLP's 1990 and 1991 annual reports made mention of declining sales because of 'continuing migration' of business over the border. Emily Lau Wai-hing of The Frontier asked whether the failure to pass to Exco the low-growth forecast was a dereliction of duty by Mrs Chan. Mrs Chan said: 'It is a matter of judgment as to how much information should be provided.' She said the information had not been submitted because officials had not found it convincing. 'We made no attempt to distort facts or to give misleading facts. We had no motive to try to hide information from Exco,' she said. Mrs Chan said her branch had asked questions about the CLP options, but no records had been kept. Eric Johnson, Principal Assistant Secretary for Economic Services, said the queries were made during internal discussions, some over the phone. In 1997, the Government ordered CLP to shelve the final phase of the Black Point plant because of excess capacity.
