An Open Letter to CLP

Press release - 2006-04-25

Mr. Michael D. Kadoorie

CLP Holdings

147 Argyle Street, Mong Kok,

Kowloon, HK

25th April 06

Dear Mr. Kadoorie,

We have not met for a year since Greenpeace representatives attended in CLP's 2005 AGM.  Hope everything with you is good.

As we have some difficulties in getting in touch with your colleagues for a genuine discussion on issues related to air pollution and RE development, I am writing to you to draw your attention to several issues which Greenpeace would like to know more from CLP.  I am glad that if you can address them in today's AGM or occasions in the near future.

a) Coal-fired plants

The coal-fired plants of Castle Peak power station are going to be expired very soon, in which plant A will be expired by 2012 and plant B by 2016.  As Castle Peak power station is the major power generation unit in HK, which is also the main cause of air pollution in local context, what would be the plan for CLP to deal with this situation?

If the coal-fired generating units are going to be upgraded and extended their life-cycle, then how much does CLP need to invest?  If not, what steps will CLP take to replace these units and how much do they cost instead?

b) BLCP transaction

According to the news report in Bangkok Post (8 April 06), CLP Power Asia has decided to sell the entire 50% stake in BLCP Power Co to EGCO and the transaction will be completed in the second quarter of 2006.  As CLP Power Asia is also planning to transfer 22.4% of its stake in EGCO to OneEnergy, the stake of CLP Power Asia in BLCP will be reduced from 50% to 11.2%.

As mentioned in CLP Holdings Annual Report 2005, "We believe that the underlying economics of BLCP are strong and that it will prove to be a valuable investment for the CLP Group." (page 60)  What are the reasons for this "sudden" change?

c) Environmental requirements under the post-SOC regime

In the leaflet "CLP's Views of Government's Consultation Paper on the Future Development of the Electricity Market in Hong Kong - Stage II Consultation" published in March 2006, CLP mentioned that both "energy policy" and "environmental policy" are unclear and the suggested environmental regulations are "unreasonable", which will significantly increase the risk of CLP investment.

What we know from officials of Environmental Protection Department, however, the government prefers not to intervene the fuel mix of power companies, but rather to restrict the level of emission, and the power companies can adjust the fuel mix accordingly to achieve the reduction target. In this light, as a policy direction, the emission reduction target agreed by the Guangdong and Hong Kong Government should be clear enough.  Does CLP prefer a dictation from government on fuel mix instead?

Furthermore, as mentioned by CLP in the document to HKSAR Legislative Council in July 2005 regarding the financial plan, CLP publicly announced their inability to achieve the 2010 emission reduction targets.  CLP showed strong reservation to the suggestion of linking up the emission performance and permitted rate of return, if not oppose completely, does it mean that CLP refute to face the penalties of not meeting the reduction targets?

Last but not least, we appreciate the recent establishment of "CLP Renewables" in your corporate to oversee the renewable energy development projects and potential.  We are very much happy to further share Greenpeace expertise in the renewable energy field and contribute to anything if you think Greenpeace is able to help.  It would be great if we are able to meet up with you and your colleagues from "CLP Renewables" and CLP Power Asia in the near future.

Should you have any questions, please feel free to contact me at 28548300.  Looking forward to hearing from you soon.

With best wishes.

Yours sincerely,

____________________

Chow Sze Chung

Air Pollution Campaigner

Greenpeace China

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