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Following is the speech (English only) by the Secretary for Economic Development and Labour, Mr Stephen Ip, at the International Conference on Electrical Engineering (ICEE 2003) today (July 7):

Professor C C Chan, Dr Alex Chan, Distinguished guests, ladies and gentlemen,

I am very happy to join you this morning to take part in this International Conference on Electrical Engineering. Let me first of all extend a warm welcome to all our honoured guests who have travelled to Hong Kong to participate in this important event. You are clearly visionary people -- you've chosen an exceptionally good time to be in Hong Kong. Our hotels, restaurants and shops are offering extremely attractive discounts to visitors these days. I am also delighted to see many of our colleagues here this morning, and would like to commend the Hong Kong Institution of Engineers on their efforts and determination to bring this international forum to fruition in Hong Kong.

In his message, the Conference Chairman, Professor C C Chan, has identified application of innovative strategies and the sharing of knowledge and ideas across international boundaries as the strategy for meeting the challenges ahead. Hong Kong has increasingly adopted this approach, as you can see from our many major infrastructure projects. These have been built on the wealth of professionalism and international expertise provided by engineering institutions such as those represented here this morning.

During this conference, delegates will consider the development of electricity as an intelligent, clean and efficient energy source for the 21st century. Like other major international cities, Hong Kong relies on electricity as a principal energy source to underpin its sustained economic development.

In the 1950s -- so I was told -- a light bulb might be the only electrical product a Hong Kong family would own, and an electric fan or a radio was considered a luxury. Today, each household in Hong Kong will typically own at least two air-conditioners, at least one TV set and a personal computer, in addition to a wide range of kitchen appliances. At present, electrified railways and urban trams account for about 30 per cent of all public transport journeys.

Indeed, in the past 20 years, overall electricity consumption in Hong Kong has grown more than three-fold. Per-capita electricity consumption has increased from some 2,400 kWh per annum to around 5,600 kWh. That's despite the peaks and troughs in our economy, and this trend is expected to continue well into the future.

Government Energy Policy

Hong Kong has no indigenous energy resources. And being a net energy importer, we are potentially susceptible to changes in the global energy market. It is against this background that we pursue the dual objective of our energy policy -- to serve reliable and safe energy supplies at reasonable prices to the public, and to sustain our economic development. We believe the private sector is best placed to supply our energy requirements in response to market demand. The Government's role is to facilitate the development of the energy sector while, at the same time, to safeguard the interests of consumers, ensure public safety, and protect our environment.

Electricity Supply Industry

Electricity in Hong Kong is supplied by two investor-owned companies: CLP Power Hong Kong Limited and the Hongkong Electric Company Limited. These companies do not have franchises or exclusive rights to supply electricity, but on a de facto basis they serve different geographical areas.

Starting in the 1960s, the Government has entered into successive Scheme of Control Agreements with the two power companies. These agreements provide the framework for ensuring continued reliability in power supply over the years, at reasonable cost. Through these agreements, the Government is empowered to monitor the companies' financial affairs. This allows us to protect the interests of consumers while also maintaining incentives for the two companies to continue long-term investment and improve plant efficiencies.

The agreements have also led, for example, to the installation of flue gas desulphurisation facilities in existing coal-fired plant, wherever possible, in order to reduce the level of emissions. They have allowed the need for increasing major generation capacity to be met by new high-efficiency combined-cycle units fired by natural gas, so as to minimize environmental impact. And they contain financial measures to guard against the installation of plant that could result in excess generation capacity.

Power Generation and Transmission

Power generation in Hong Kong involves a mix of generating plants. Most are coal-fired, accounting for about 70 per cent of the total installed capacity. Other generating plants are gas combined-cycle units, which represent around about 20 per cent of the total installed capacity, and diesel oil-fired combustion turbines, at about 10 per cent. The combined-cycle generating units at CLP Power's Black Point Power Station are fuelled by natural gas piped from Yacheng gas field in the South China Sea. Following government approval of Hongkong Electric's new generation development plan in 2000, a new 300MW combined-cycle generating unit on Lamma Island will receive natural gas from the LNG terminal being built at Shenzhen, just across the boundary in Guangdong Province. And there are plans to install two further gas-fired combined-cycle generating units at Black Point Power Station.

Quality and Safety of Supply

The term "Power Quality" now refers to the quality of the power supply, including stability, voltage and frequency variations, as well as a "clean" waveform free from distortion. This subject is of increasing concern internationally to electricity suppliers and consumers. Because computers and sophisticated industrial equipment are now much more sensitive to disturbances and distortion of the power supply, any interference such as voltage variation, even for a fraction of a second, will give rise to nuisance tripping and cause much inconvenience to customers.

Nowadays electrical power plays an increasingly important role in every sector of the community, in meeting the demand for better quality of life and matching the quickened pace of commercial and industrial activities. Customers today have higher expectations about the quality and reliability of electricity supply than they did decades ago.

Resolving power quality issues will require the concerted efforts of the electricity suppliers and their customers. I know that electrical engineers worldwide, including members of your institutions, are gearing up to face this technical challenge, particularly in the development of new technology, to help the electricity suppliers and consumers tackle the issue of power quality.

On the safety side, I am pleased to report that Hong Kong has an efficient and transparent regulatory framework for setting technical requirements on quality and standard of electrical installations. We have comprehensive safety legislation in place to ensure the safety of consumers' electrical installations and household electrical products. Electrical workers and contractors must be registered under the Electricity Ordinance before they can practice their trade. The Government has published a Code of Practice for the Electricity (Wiring) Regulations to provide technical guidelines to electrical professionals and trade workers on how to comply with legislative requirements.

Opportunities and Challenges Ahead

Although our electricity supply is very reliable and safe, we are not complacent. We will continue to review our regulatory guidelines, improve supply plants and facilities, and promote energy efficiency and conservation. We will continue to assess the potential of increasing interconnection capacity and competition in the electricity supply sector. As many of you know, the current Scheme of Control Agreements will expire in 2008. We plan to draw up, in good time, a broad direction for the future development of our electricity supply market. While different options will be explored, our primary focus will remain ensuring reliable supply to the customer at a reasonable price.

As in other regional economies, the Hong Kong power sector faces a number of significant challenges in the coming years -- not least, striving to retain a realistic balance between fossil fuel dependency on the one hand and environmental considerations on the other. With growing environmental awareness, it is becoming increasingly important that we seek to obtain maximum benefit from the rapid development of new energy technologies, including renewable energy. I am confident that we will look towards this direction in our forthcoming review of the electricity supply market, although we will need to pay close attention at the same time to other issues like funding and reliability.

Concluding Remarks

Mr Chairman, as I noted earlier, electricity is a prerequisite for continued economic growth. Exchange of information on advances in electrical engineering technology, operation and management of intelligent, clean and efficient power systems at an international forum such as this one will most certainly be beneficial to all professionals engaged in the pursuit of sustainable development in the energy sector.

I am honoured that you invited me to deliver the opening address this morning, and most delighted that you have chosen to hold this important international event here in Hong Kong. I wish you all a very fruitful and productive conference and a most enjoyable stay in Hong Kong.

I also wish to congratulate the Chairman and organizing committee on putting together a lively and interesting programme for the delegates. I hope that outside the busy conference schedule there will be opportunity for our honoured guests to enjoy some of our world-renowned attractions -- including the Chi Lin Nunnery, which is listed in your programme as "One of the 10 Engineering Wonders in Hong Kong". Don't forget to go shopping and sight-seeing, and try as many of our restaurants as your waistlines will permit.

Thank you.

End/Monday, July 7, 2003

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