Hongkong Electric Company Ltd.

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Hongkong Electric Company Ltd.

Electric House
44 Kennedy Road
Hong Kong
(3) 843 3111
Fax: (3) 810 0506

Public Company
Incorporated: 1889
Employees: 2,800
Sales: HK$4.75 billion (US$609.5 million)
Stock Exchange: Hong Kong

At more than one hundred years old, Hongkong Electric Company Ltd. is one of the oldest electric utility companies in the world and the first to supply electricity in Southeast Asia. The company generates power for nearly half a million people on Hong Kong Island, Ap Lei Chau Island, and Lamma Island.

Hongkong Electric traces its beginnings to Sir Paul Chater, a native of Calcutta who arrived in the British colony of Hong Kong in 1864 to become a clerk with the Bank of Hindustan. By 1870 Sir Paul had left the bank to form his own brokerage house and was setting about becoming one of Hong Kong’s most prominent taipans, or merchants. Sir Paul made his early fortune through property, developing a number of commercial sites in and around Hong Kong Island’s Core Central business district, and throughout the 1870s, he developed the Hong Kong harbor, providing portside facilities for the colony’s expanding trading base.

In 1888 Sir Paul and two fellow members of the ruling Legislative Council were granted a government contract to form an electric company. The men agreed to provide street lights and to pump water to the Peak, a residential district rising high atop Hong Kong Island. The company chose a site at Wanchai—purchased from the government—to build its first power station. A year later, upon the incorporation of the Hongkong Electric Company Ltd., shares were offered to the public on the Hong Kong Stock Exchange.

In the meantime, Sir Paul was busy incorporating another company that would eventually prove to be an asset for Hongkong Electric. The new venture, the Hongkong Land Investment and Agency Company, was organized to reclaim land for new developments on the island. One of the company’s particular projects was the 57-acre Praya Reclamation Project in the Central District.

Eventually the government canceled its contract for water to be pumped up to the Peak, but Hongkong Electric was still to supply the electricity for street lights. The company had already ordered two steam-driven generating units from Britain, each with a generating capacity of 50 kilowatts. The Wanchai Power Station was brought on line at 6:00 p.m. on December 1, 1890.

By 1896 the company was flourishing, and Hongkong Electric was able to declare its first dividend. An amount totalling HK$12,000 was paid out to the company’s shareholders that year.

By this time, supplying electricity to new property developments built by Sir Paul was becoming a successful venture. One such development, the Queen’s Hotel which opened on the Praya reclamation site in 1898, was supplied with energy to drive the first electric elevators installed in Hong Kong. The elevators—four in all—sped up and down the structure at 200 feet per minute and operated on a DC electricity supply from Hongkong Electric’s first substation.

Rather than taking up precious land—of which Hong Kong Island has so little to spare—in 1905 Hongkong Electric adopted a policy of installing supply cables underground. The company continued to maintain this policy, although the plan did encounter difficulties in its early stages when white ants began eating into the cable coverings.

In 1909, the first light bulbs using metal filaments were installed in residential and commercial buildings on the island. The new bulbs emitted far more light than those previously used, which had filaments made of bamboo. A year later electricity was made available to the western areas of Hong Kong Island and the fashionable Peak residential district.

In 1914 Hongkong Electric decided to expand from its original Wanchai Power Station after the plant’s generating capacity became overloaded. A second power station—this one a coal-fired facility—was to be built at North Point, a rural area that was suited for such a plant. A site of approximately 125,000 square feet was purchased for a cost of HK$37,500.

By 1916 sales revenue for Hongkong Electric had topped HK$1 million. Three years later, the new North Point Power Station was brought on line with an initial capacity of 3,000 kilowatts, while the Wanchai Power Station was put on standby. In 1925 an out-of-town substation was opened at Shaukiwan. That same year the supply voltage was changed from 100 to 200 volts. The change meant more than the throw of a switch—240,000 light bulbs were issued free to the company’s customers and all manner of appliances had to be converted or exchanged. A year later the company, as well as Hong Kong Island, lost a guiding light when Sir Paul Chater died.

The Japanese occupation of Hong Kong, beginning in 1941, had huge consequences for Hongkong Electric. Following the invasion, the North Point Power Station was shut down and abandoned in December. Although the Times of London reported in 1942 that the North Point Power Station had been attacked and destroyed by American bombers, the plant was again generating power two months after the liberation of the island in August of 1945.

Demand for electricity began to grow markedly with the influx of Chinese immigrants following the rise of the Communist regime in that country in 1949. In an effort to keep up with the demand the North Point Power Station was refitted and a 20-megawatt generating unit—thus far the company’s largest—was installed in 1955. Then, three years later, to meet the still-growing demand, the transmission network voltage was upgraded from 6,600 to 33,000 volts with the installation of an even larger 30-megawatt generator at the newly-commissioned North Point “B” station.

By 1964, Hongkong Electric had decided that the North Point Power Station, in addition to having become an environmental hazard in its now-residential site, would not have sufficient capacity to meet projected future demand. In order to build a new oil-fired power station, the company purchased a plot of land on Ap Lei Chau Island. In 1966, as construction continued on the Ap Lei Chau station, North Point “C” station—computerized and oil-fired—was brought on line with a 60-megawatt unit, bringing the network’s voltage up to 66,000 volts. In 1968 the first unit at Ap Lei Chau Power Station began generating power.

By this time demand for electricity in Hong Kong was growing exponentially. A 125-megawatt generator, manufactured by the Japanese company Mitsubishi, was brought on line at Ap Lei Chau. Over the course of the next ten years, another six identical units were installed, bringing the entire transmission network voltage to 132,000.

In response to community concern that the company’s three smokestacks were offensive due to their resemblance to the joss sticks used in the rituals of ancestor worship and funerals, Hongkong Electric built a fourth stack. Because the additional smokestack was not necessary at that point in time, it went unused, leading to the popular notion that the chimney was a dummy one.

In 1978 the company began planning another new power station, purchasing a site on Lamma Island at Po Lo Tsui. Hongkong Electric made a strategic move when, in response to the OPEC (Organization of Petroleum Exporting Countries) hold on the oil market and the subsequent steep increase in prices, the company decided to equip the new plant with dual-firing capabilities. Therefore, the facility could be run on either coal or oil, as circumstances warranted.

Beginning in 1979, Hongkong Electric was regulated through a Government Scheme of Control in an effort to guarantee equity between the company’s customers and stockholders and the Hong Kong Island community. In a cooperative effort, in 1981 the company signed an agreement with China Light & Power, connecting the two systems. With the ability to transfer up to 480 megawatts, the companies could operate more efficiently in addition to having reserves available for times of peak demand.

A world record was established in 1982 with the completion of the Lamma Power Station, constructed in just under three and a half years. The first unit to go on line, a 250-megawatt coal-fired generator, brought the transmission network voltage up to 275,000 volts.

The 1980s brought Hongkong Electric several more milestones. First, in 1983, the company topped the 1,000 megawatt mark in maximum demand. In 1985 work was completed on the Wanchai Zone Substation, the first substation built in the Far East on a modular basis, saving both time and expense during construction. Then, in 1986, the second phase of the 275-kilovolt submarine cable network, transmitting energy from the Lamma Power Station to Hong Kong Island, was brought on line. This completed the highest-capacity submarine cable network anywhere in the world.

During this period Hongkong Land Holdings Ltd., the property development company originally founded by Sir Paul Chater during the 1870s, decided to diversify its holdings in an effort to weather the recessionary conditions on the island. Prompted by the success of the utility company, Hongkong Land Holdings purchased an undisclosed stake in Hongkong Electric for investment purposes.

In 1987 a second coal-fired generator, this one with a 350-megawatt capacity, went online at the Lamma Power Station. The was the company’s largest unit, representing a generating capacity 7,000 times greater than Hongkong Electric’s first unit, originally installed at Wanchai Power Station.

In 1989 the company recorded that demand for electricity in Hong Kong had exceeded 1,000 megawatts during every month of the year. After six 125-megawatt generators were transferred from Ap Lei Chau to Lamma, where they were to be operated by gas turbines, the Ap Lei Chau Power Station was shut down.

The Lamma Power Station was by now using both coal and oil firing to remain flexible in its fuel use, however, the use of coal far outweighed that of oil. Coal consumption in 1988 was 2.3 million tons, and was expected to increase at an average yearly rate of 5 percent. The station contained a jetty alongside the facility from which coal could be unloaded out of ocean-going vessels. To operate and monitor all the generating units, the Lamma station also contained a Central Control Room that acted as the nerve center of the complex. Complex data-processing systems helped personnel keep a running tab on energy output and control the generating units for accuracy, efficiency, and economy.

In 1988 the company constructed and opened a 3.1-kilometer tunnel between Wah Fu and Kennedy Road in order to house its 275-kilovolt transmission network. The tunnel replaced the laying of 275-kilovolt cables in busy urban areas, thereby avoiding disrupting traffic or ruining the environment.

The early 1990s were a time of further construction for the company as more generating units were added to the Lamma Power Station, helping to ensure that future demand can be met. Hongkong Electric’s future seems assured, providing electricity in what promises to be one of the fastest-developing regions of the Far East in the 1990s.