The demand side management agreement entered into by the government of the hong kong special administrative region, clp power hong kong limited, castle peak power company limited, and exxon energy limited
The Demand Side Management Agreement entered into by the Government of the Hong Kong Special Administrative Region, CLP Power Hong Kong Limited, Castle Peak Power Company Limited, and Exxon Energy Limited
(1) THE GOVERNMENT OF THE HONG
KONG SPECIAL ADMINISTRATIVE REGION ("the
(2) CLP POWER HONG KONG
LIMITED ("CLP POWER"),
whose registered address is 147 Argyle Street, Kowloon, Hong Kong;
(3) CASTLE PEAK POWER COMPANY
whose registered address is 147 Argyle Street, Kowloon, Hong Kong;
(4) EXXON ENERGY LIMITED
whose registered address is St. George's
Building, 2 Ice House Street, Hong Kong.
WHEREAS : -
(A) The Government, CLP POWER,
EEL and CAPCO entered into a Scheme of Control Agreement dated 9th
March 1992 as amended
by a Supplemental Agreement dated 6thMay
1999 ("the SCA").
(B) The SCA governs
the financial affairs of CLP POWER and CAPCO ("the
so far as they refer to electricity-related activities excluding
those associated with export sales of electricity in accordance with
the separate arrangement between the Companies and the Government.
(C) The SCA requires
CLP POWER, in adjusting its tariff, to take into account, amongst
other things, promotion of energy efficiency and conservation in
conducting its electricity-related operations.
(D) The SCA also regulates
the Permitted Return of the Companies for any year in respect of
their electricity-related operations.
(E) The Government wishes to
promote energy efficiency and conservation while ensuring service of
the Companies to the consuming public continues to be adequate to
meet demand, to be efficient and of high quality, and is provided at
the lowest cost which is reasonable in the light of financial and
(F) The Companies agree to
promote energy efficiency and conservation by adopting Demand
as contemplated by the DSM Handbook.
(G) CLP POWER agrees to
recover Programme Costs
from its tariff income
in accordance with the terms and conditions set out in the DSM
(H) The Government and the
Companies enter this Deed on the terms and conditions hereinafter
NOW IT IS HEREBY AGREED as
1.1 In this Agreement, except
where the context otherwise requires, the following expressions have
the following meanings:
Programme Activity Status means the report prepared
Report" Companies setting
out the achievement in energy and maximum demand savings and the
cost-effectiveness of the DSM Programmes in operation during the year
means demand side management as contemplated by the Handbook.
"DSM Account(s)" means
the account(s) to be used to track DSM-related programme costs. The
Companies shall recover DSM related costs in the year after they are
"DSM Charge" means a
tariff, which shall be separated from the Basic Tariff as described
in the SCA, for recovery of the Programme Costs where appropriate as
agreed between the Government and the Companies.
the handbook setting out technical reference for this Agreement,
a copy of which is annexed hereto,
or any revised version of handbook as may from time to time be
mutually agreed by the parties hereto.
reflecting the performance of implementing DSM programme(s). Its
value is determined in accordance with the formula specified in
3 and 5 of
"Permitted Return" shall
have the meaning given to it in the SCA.
means the programme(s) as set out in the Resource Plan or such other
DSM programme(s) as may from time to time be agreed in writing by the
the actual incurred costs of the Programmes approved by the
Government in the DSM Resource Plan.
a 365/6-day calendar year of programme activities, used to report
programme plans and programme accomplishments.
the DSM Resource
setting out the objectives and the implementation of DSM Programmes,
budgets and projected Performance Indexes,
as may be approved by the Government pursuant to Clause
means the Scheme of Control Agreement
as amended by the Supplemental Agreement entered
into by the Government, CLP POWER, CAPCO and EEL dated 9th March 1992
and 6th May
Accomplishments means a report summarising
results of all Programmes that have been implemented during the
Resource Plan period.
Term of this Agreement
2.1 This Agreement shall
commence on the date hereof and shall continue subject as hereinafter
mentioned until 30th
June 2003 and may be
renewed on such terms and conditions as mutually agreed
2.2 During the nine
months prior to 30th
June 2003, the parties
hereto shall institute discussions regarding the renewal of this
DSM Resource Plan
3.1 Within two
weeks of commencement
of this Agreement and thereafter six months before expiry of a
Resource Plan, CLP POWER and CAPCO shall prepare and submit a
which shall conform to the requirements of the Handbook including
without limitation the overall budget for the Resource
and the projected value of Performance
as set out in the Handbook, to the Government for approval.
3.2 If, in the opinion of the
Government, a Resource
fails to conform to the Handbook, the Government shall so notify CLP
POWER and CAPCO and provide written particulars, and CLP POWER shall
within 14 days or such later date as may be agreed by the Government
provide a revised Resource
for review by the Government.
3.3 If the Government is
content with the Resource
or the revised Resource
the Government shall notify CLP POWER in writing of its approval.
4. CLP POWER shall implement
the Programmes in accordance with the Resource Plan approved by the
Government under Clause 3, or otherwise as approved in writing by the
5.1 Under this Agreement, CLP
POWER is to establish
a DSM Account through which it shall
recover all Programmes
Costs of the DSM Programmes as defined in this Agreement and the
Handbook. To achieve
this recovery CLP POWER shall be entitled to charge consumers a DSM
Charge which shall be separate from a Basic Tariff as described in
the SCA. The recovery shall be in accordance with the terms and
conditions specified in Chapters 3 and 5 of the Handbook.
Companies agree to bear out of their shareholders’ funds any
Programme Costs not recoverable under Chapter
5 of the Handbook and such shortfall shall be apportioned and
allocated as between CLP POWER and CAPCO as agreed between them.
Submission of Reports
6.1 The Companies shall
submit, within two months from the end of each Programme Year, an
Annual Programme Activity Status Report, specified in Chapter 3 of
the Handbook, to the Government for monitoring the progress of the
6.2 The Companies shall
submit, within three months after the expiry of the Resource Plan, a
Summary Accomplishment Report, specified in Chapter 3 of the
Handbook, to the Government for review and approval by the
7.1 The Companies shall keep a
separate account for each Programme.
7.2 Each separate account
shall provide details of the Companies’ Programme Costs related to
the implementation and operation of Resource Plan.
7.3 The Programme Costs
recoverable by the Companies shall be determined in accordance with
Chapter 5 of the Handbook.
7.4 Programme Costs will not
form part of the fixed assets eligible for Permitted Return under the
7.5 The Companies shall follow
such accounting practice as adopted in the SCA in preparing DSM
7.6 In the event of
termination of the Agreement or cessation of the
DSM Programmes, the disposal of any balance of the DSM Accounts by
the Companies will be subject to the agreement of the Government.
Operational Transparency of
8.1 CLP POWER shall, upon
request by the Government, brief the Government, the legislature or
any of Government's advisory bodies on energy or environmental
protection matters on activities related to the implementation and
operation of DSM Programmes.
8.2 CLP POWER shall arrange
for a statement of the Performance Index and Programme Costs relating
to the operation of each DSM Resource Plan in force for the relevant
year to be shown separately by way of a note to the annual audited
statement of accounts of the company.
Disclosure of the Agreement
party may make copies of this Agreement available to the public or
any third party.
dispute, difference or disagreement arising out of or in connection
with this Agreement may (subject to Clause
be referred by either party to an arbitrator appointed by agreement
between the parties or, in default of agreement between the parties
within 30 days of a request in writing for a reference to an
arbitrator, be referred to arbitration in accordance with the
Arbitration Ordinance, Chapter 341. Any arbitration initiated
hereunder shall be a Domestic Arbitration for the purpose of Part II
of the Arbitration Ordinance, Chapter 341.
to any dispute, difference or disagreement being referred to
arbitration pursuant to Clause
the parties shall use their best endeavours to resolve the matter in
costs of resolving any dispute will form part of the Programme Costs,
except in the case of the application of the cost-effectiveness test
specified in the Handbook, when they will not be counted as part of
the Programme Costs.
Relationship with the SCA
Agreement shall not form part of the SCA unless at any time during
the term of the Agreement the parties hereto agree otherwise.
CLP POWER shall take into account the Programmes and their respective
and collective impact when any Financial
Review, Tariff Review, Tariff Adjustment or Auditing Review is
conducted pursuant to the terms of the SCA.
Governing Law and
Agreement shall be governed and construed in all respects in
accordance with the laws of the Hong Kong Special Administrative
Region and each party hereby submits to the non-exclusive
jurisdiction of the Courts of the Hong Kong Special Administrative
13. This Deed supersedes
the DSM Agreement entered into between the parties dated 7th February
1998 and constitutes the entire agreement between the
parties relating to the subject-matter hereof.