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CHAIRMAN’S STATEMENT
The Board of the Trustee-Manager has declared a final
distribution by the Trust of HK20.12 cents (2015: HK20.12
cents) per SSU, payable on 19 April 2017 to SSU holders
whose names appear on the Share Stapled Units Register on
6 April 2017. This, together with the interim distribution of
HK19.92 cents (2015: HK19.92 cents) per SSU, amounts to
a total distribution of HK40.04 cents (2015: HK40.04 cents)
per SSU for the year.
INFRASTRUCTURE FOR INCREASED
GAS-FIRED GENERATION TO COMBAT
CLIMATE CHANGE
In 2015, following an extensive public consultation exercise,
the Hong Kong Government released its fuel mix strategy
for the energy sector. It mandated an increase in local gas-
fired generation to about 50% of total output in 2020 which
we fully support. In 2016, we progressed with several key
initiatives to reach this target.
We will consecutively install two new gas-fired combined
cycle generating units, L10 and L11, at LPS, our primary
generating facility, to replace retiring coal-fired and gas-
fired units. Construction of the L10 unit is progressing well
with the superstructure construction set to commence on
schedule for commissioning of the unit in 2020. Preparations
for the newly approved L11 unit are underway with piling
work having commenced at end 2016. When L11 is
commissioned in 2022, our gas-firing generation capacity
will rise to about 55% of total output which will help reduce
emissions further. We are excited about these projects and
are confident that they will be completed on time and within
budget. Other coal-fired units at LPS are coming to the end
of their useful lives and need to be replaced by gas-fired units
before the end of the next decade.
In October 2016, the Hong Kong Government’s Sixth
Technical Memorandum was published. The annual emission
allowances of sulphur dioxide (SO
2
), nitrogen oxides (NO
x
)
and respirable suspended particulates (RSP) are further
tightened by 8%, 2% and 10% respectively for HK Electric
from 2021 onwards. Our expanded gas-firing capacity as
well as other emission control measures will enable us to
meet these tightened allowances.
To maintain supply reliability while increasing gas-firing
generation capacity, it is imperative to secure the supply
chain. Hong Kong at present lacks storage facilities for
natural gas imported by sea, which also affects our
negotiating power with international gas suppliers. To
address this gap, we are, in partnership with CLP Power
Hong Kong Limited, jointly exploring the feasibility of siting
an offshore liquefied natural gas terminal using floating
storage and regasification unit technology (FSRU). The
terminal, if and when built, will serve the electricity sector
as a whole. An Environmental Impact Assessment (EIA)
began during the year. If the Government approves the EIA
report and the project in time, the terminal is scheduled for
commissioning in 2020.
CONSISTENT PERFORMANCE ACROSS ALL
PARAMETERS
While preparing for the future we continued to excel on all
operating parameters in 2016.
Supply reliability was maintained at over 99.999% for
the twentieth consecutive year and unplanned power
interruption per customer was under one minute for the
eighth consecutive year. I am gratified to note that we,
once again, met or surpassed all eighteen customer service
pledges, as we continue to offer customers reduced tariffs
in response to softer fuel prices. Electricity sales in 2016
declined slightly by 0.8% as a result of conservation efforts
across the community.
In preparation for the expansion of our gas-firing generation
capacity, security and reliability enhancement works were
carried out on the gas receiving station at LPS. On the
transmission and distribution front, proactive network
enhancement and improvement projects were implemented,
to maintain high standards with respect to system reliability
and power quality, and new equipment was commissioned
for provision of new supply. Equally, we remained a prudent
and mindful consumer of energy in our office buildings and
across our fleet of company vehicles.
We believe that Electric Vehicles (EVs) have great potential to
reduce roadside emissions. Our own fleet has over a hundred
EVs. We were the official energy partner for the first Hong
Kong ePrix held in October 2016, helping increase awareness
that EVs are powerful enough to make it to the racing
circuit. Other initiatives during the year included EV charging
advisory services for buildings and the continued provision of
free charging facilities in public carparks.
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HK ELECTRIC INVESTMENTS