Page 24 - Sphere No.6 (Jun 2002)

SPHERE
22
C O V E R S T O R Y
CLEAN , GREEN AND UNSEEN
A CENTURY AGO, “ENVIRONMENTAL PROTEC-
tion” was almost unheard of, but that did not stop
Hongkong Electric from taking steps to improve the
burgeoning city’s environmental safety. In 1902, smoke from
the company’s Wan Chai power station posed an environ-
mental risk to Hong Kong’s Central Business District. To
remedy the problem the company immediately purchased
smoke-consuming apparatus from England. At the next general
meeting, Hongkong Electric’s chairman pledged that the
company would no longer produce such emissions, eliciting a
round of applause from the gathered shareholders.
One hundred years later, Hongkong Electric continues to
take its role as a responsible corporate citizen very seriously.
Working closely with the Government’s Environmental
Protection Department, the company has successfully imple-
mented a HK$4.9 billion (about US$628 million) programme
to raise environmental standards to levels much higher than
those required under existing legislation.
“We make every possible effort to
ensure our operations are environ-
mentally sound. We maintain stringent
controls to prevent air, noise and water
pollution, we recycle waste, and we
actively protect and enhance the nat-
ural landscape,” says Group Managing
Director K.S. Tso. “State-of-the-art
technologies are adopted whenever
practical and commercially available to
ensure the environmental impact of our
operation is kept to a minimum.”
To maintain air purity, a flue gas
desulphurisation system removes at
least 90% of sulphur dioxide emissions.
Low nitrogen oxide burners are
deployed in coal-fired boilers to reduce
by two-thirds concentration of NOx in
the flue gas. Electrostatic precipitators
clean furnace gases further before dis-
charge from the 215m-high chim-
neystacks, dispersing emissions away
from populated areas. Meanwhile, mon-
itoring stations on Hong Kong and Lamma islands keep check
on ambient air quality.
The company also employs comprehensive waste-recy-
cling strategies.“There is very little waste that is not recycled
from the Lamma Power Station,” notes Technical Services
Engineer KamWing Fai, who is charged with honing the plant’s
efficiency.“For example, coal ash and gypsum by-products are
sold to be used for construction materials.”
With an idyllic location overlooking the West Lamma
Channel, the company pays equally close attention to the sur-
rounding waters. Local anglers testify that fish are plentiful,
attracted perhaps by the flow of warm water which, having
cooled the plant, is pumped back into the sea. Furthermore,
the company has co-sponsored a research study on the use of
coal ash as artificial reefs for marine conservation.
In recent months the company has planned to invest
(through a 26% stake in Union Power Development) in build-
ing a HK$9.8 billion (US$1.26 billion) power plant in
Thailand that will consist of two 700MW coal-burning plants.
Again, returns are highly predictable as the power station
has a power purchase agreement with the Electricity
Generating Authority of Thailand, which is state owned.The
project is at the final stage of securing approval from the Thai
government.
With an investment philosophy that bears obvious rewards,
it is little wonder that shareholder confidence is high. In 2001,
net profit rose 18% to HK$6,507 million.
“Many of our 16,300 shareholders invest in our company
because of its stable earning power,” Mr Tso observes.
BRIGHT FUTURE
Because electricity is such a vital commodity, it is not uncom-
mon globally for governments to exercise some form of regu-
latory control.
Hongkong Electric is party to the Scheme of Control
Agreement with the SAR Government, under which utility
companies are seen to balance the benefits for both customers
and shareholders.
The scheme safeguards consumers by ensuring them of
reasonable tariffs and
reliable services. In
turn, shareholders
receive a specified
“permitted return”
provision for their
long-term invest-
ments.
The Agreement
is set to expire in
2008 and Mr Tso is
confident that a new
arrangement will
prove agreeable to all
parties.
Taking the long
view, Hongkong
Electric has begun
work on the fourth
stage of the Lamma
Power Station to
cope with electricity
demand that contin-
ues to grow at
between 3% and 5% per year.
Some observers believe a fully liberalised electricity
market would better serve consumers. Others argue that
liberalisation is impractical, especially in a territory defined
by its critical shortage of suitable sites and a relatively small
market.
It is unlikely that significant market liberalisation would
reduce costs to consumers or improve on the already near-
perfect reliability. True, Hongkong Electric is the sole utility
provider in its domain, but it nevertheless is a highly compet-
itive operation, constantly balancing the interests of its cus-
tomers, the environment and shareholders while achieving
ever-greater efficiency.
As the record shows, the company has been well plugged
in to its environment for almost 112 years. It is also impecca-
bly equipped to illuminate the future.
The Admin Building at Lamma Power Station.