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LCQ3: Energy conservation

     Following is a question by the Hon Elizabeth Quat and an oral reply by the Secretary for the Environment, Mr Wong Kam-sing, in the Legislative Council today (July 3):


     It is learnt that the Secretary for the Environment has indicated that energy saving is one of the directions of the interim review of the Scheme of Control Agreements (SCAs) entered into by the Government and the two power companies.  Under SCAs, the Government will assess the performance of the two power companies based on the number of energy audits they perform for customers and the actual energy saved (energy saving targets), and a maximum award of 0.02 percentage point in permitted return will be given as an incentive.  It has been reported that the actual energy to be saved by customers as specified under SCAs accounts for only about 0.03% to 0.04% of the annual local electricity sales of the two power companies, and the two power companies provide such service only to commercial customers.  In this connection, will the Government inform this Council:

(a)  of the respective annual number of energy audits performed by the two power companies for their customers, the actual energy thus saved, and the amount as well as the ratios of the bonus return so earned, since the implementation of SCAs; whether the Government and the two power companies had set energy saving targets in the past based on any scientific criteria, and whether they had ascertained that such targets were appropriate and feasible based on any standards or researches;

(b)  whether the authorities have assessed if the aforesaid terms of SCAs are operating effectively; if they have, of the outcome; whether the interim review of SCAs being conducted includes a review of the aforesaid terms; if so, whether they have demanded the two power companies to raise the targets for the energy to be saved for their customers to at least 1% of their annual electricity sales, required the two power companies to provide energy audit service to domestic customers, and prescribed penalties for failure to meet the energy saving targets, etc., so as to improve the relevant terms; if they have, of the responses of the two power companies so far; and

(c)  whether it has made reference to relevant overseas experience before drawing up the aforesaid terms; if it has, how the mainstream terms adopted by overseas countries compare with the aforesaid terms; if there are differences between them, of the main reasons for that and the impact of such differences on the customers of the two power companies?



     The Administration has been attaching great importance to the work on environmental protection and energy conservation.  Over the past five years (2008-12), the Gross Domestic Product of Hong Kong has increased by about 19.6%, and the increase in electricity consumption over the same period was about 5.1%.  Comparing with 8.1% over the first five years (2000-04) in 2000s, the growth rate of electricity consumption has shown a decelerating trend significantly.  In respect of energy saving target, as a member of the Asia-Pacific Economic Cooperation, Hong Kong has committed to striving to meet the target of reducing energy intensity by at least 45% by 2035, using 2005 as a base year, and has been promoting demand side management and enhancing energy efficiency through various measures.

     To effectively promote energy conservation, Government's effort alone is not enough.  Only by the collaboration of the community at large can the goal be achieved, and power companies have a certain role to play.

     My reply to the Dr Hon Elizabeth Quat's question is as follows:

(a) and (b)  The current Scheme of Control Agreements (SCAs) signed between the Government and the two power companies provide the two power companies with financial incentives in respect of energy saving and energy audits, in order to incentivise them to enhance energy efficiency performance.  Regarding energy audits, if the number of energy audits completed in a year by the power companies for their customers meets the target, they can obtain an incentive of 0.01 per cent on the average net fixed assets value for that year.  The energy audit target for CLP Power Hong Kong Limited (CLP) is 150 cases or above per annum and for Hongkong Electric Company Limited (HKE) 50 cases or above.  As regards energy saving, if the amount of energy saving for a year by the power companies meets the target, they can obtain an incentive of 0.01 per cent on the average net fixed assets value for that year.  The energy saving target for CLP is 12GWh or above per annum and HKE 3GWh or above.  These energy saving targets have been drawn up after discussion with the two power companies in the past, striking a balance among various objective considerations including power companies' forecast, market reaction and cost effectiveness.

     The Government reviews the energy efficiency performance of the power companies in accordance with the SCAs.  Over the past four years since the current SCAs came into effect in 2008/09, the two power companies have completed over 850 cases of energy audits and received incentive of about $55 million in total.  Furthermore, CLP has saved over 60 GWh of electricity and received incentive of about $35 million.

     I would like to stress that there are strict requirements in the SCAs that the energy saving performance of the two power companies must be assessed in accordance with the aggregate energy saving attributable to the improvement works carried out by customers based on the energy audits conducted by the power companies for them.  This is to ensure that the power companies' energy saving performance is supported by objective data before they can receive the financial incentive.

     The current SCAs run for a term of ten years and will expire in 2018. The SCAs stipulate clearly that the Government and the two power companies shall have the rights during 2013 to request modification of any part of the current SCAs for a review, and mutual agreement is needed before implementing any proposed modification.  The Government has engaged relevant experts, academics, green groups and other stakeholders on the mid-term review and relevant energy matters to solicit their views. We have also attended meetings of the Panel on Economic Development of the Legislative Council to listen to the views of Members and attending deputations.  We understand that the public are highly concerned about the energy efficiency performance of the power companies and have included this as part of the scope of the mid-term review.  We are currently carrying out the review with the two power companies. We expect to complete the review by end-2013 and will brief the Legislative Council and the public on the outcome.

(c)  The Hong Kong electricity market is mainly regulated by the SCAs, which stipulate the rights and obligations of the power companies, as well as the Government's role in monitoring the power companies' financial and technical performance, etc. There is no relevant overseas experience in respect of the provisions in the SCAs concerning the power companies' energy audits and energy saving performance for direct reference.  

     We are aware that different regions formulate different energy saving measures by adopting different methods having regard to their local circumstances and objectives. In Hong Kong, we promote energy efficiency and conservation mainly through various aspects including legislation, policy and public participation.  For instance, the Buildings Energy Efficiency Ordinance was fully implemented in September last year to improve energy efficiency of major building services installations, such as air-conditioning , lifts and lighting.  We are also constructing a first-of-its-kind district cooling system in Hong Kong to provide more energy efficient air-conditioning system to the non-domestic developments at Kai Tak Development.  

     To strengthen co-ordination among bureaux and departments, the Government has earlier set up an inter-departmental Steering Committee for the Promotion of Green Building under my chairmanship to  formulate environmental implementation strategies and action plans for government buildings and private buildings in Hong Kong. The Government has also led by example by setting in 2009 the target of achieving five per cent saving in the total electricity consumption in Government buildings from 2009-10 to 2013-14, using the electricity consumption in 2007-08 as the baseline and under comparable operating conditions.  In 2011-2012, the saving in electricity consumption in Government buildings on this basis reached 8.3 per cent, which exceeded the original target.

     We have also been promoting community-wide participation in energy saving through various activities.  For instance, we have recently launched the Energy Saving Charter on Indoor Temperature and the Energy Saving Charter on "No Incandescent Light Bulbs", to encourage the community to reduce electricity consumption through air conditioning and lighting.  Furthermore, to encourage individual consumers to select more energy efficient products, we have implemented the Energy Efficiency Labelling Schemes, and are considering expanding the schemes to cover more products.

     Thank you, Mr President.

Ends/Wednesday, July 3, 2013
Issued at HKT 16:32


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