The proposed power installation project from Lantau to Cheung Chau typifies the problems the government faces and proves the need for an updated supply system, a lawmaker claims. Legislator Andrew Cheng Kar-foo, of the Democratic Party, said only by integrating the supply grids of Hong Kong's two power firms, Hongkong Electric and CLP Power, could improvements be made. The government has been under pressure to overhaul its power supply policies to prevent wastage of resources and reduce negative impacts on the environment. 'To reduce the environmental impact on the area, the best way would be to install cables from Lamma Island to Cheung Chau,' Mr Cheng said. 'However, this could only be achieved if an interconnection system [between the two power firms] is introduced.' Lamma and Cheung Chau come under the domain of the two different suppliers. While CLP Power supplies electricity in Kowloon, the New Territories, Lantau and most of the outlying islands, Hongkong Electric serves Hong Kong Island and Lamma. Mr Cheng said introducing an integrated grid system would reduce the negative environmental impact and increase consumer choices. Echoing his views, Lister Cheung Lai-ping, deputy chief executive of the Conservancy Association, urged the government to review the strict demarcation the two companies had. The government is studying the future regulatory needs of the power industry and how to update the scheme of control, which expires in 2008. Under the agreement, the two power companies are allowed to earn up to a 15 per cent return on fixed assets, which analysts have said encourages over-building of plants.