Companhia de Electricidade de Macau (CEM), which has lit up the lightbulbs in Territory of Macau for more than a century, and its CEO Franklin Willemyns speaks to Asian Power about CEM's strategies in battling rising fuel costs and increasing tariffs. Willemyns, is also the Chairman of 17th Conference of the Electric Power Supply Industry (CEPSI), which Macau hosts this year.
How is CEM combating the rising capital costs in the power industry?
Everybody in the power industry is facing this issue, and doing what we are trying to do. There are two things: on one side there is the sourcing of the primary energy which depends on the prices in the market. In Macau, there is gas or fuel for generators, or we import electricity. It is this diversity of different options that allows us to have high reliability. If the price is right for gas, we try to use more gas, and if the price is right for fuel we use more fuel. We are always playing around with our primary energy mix.
On the other side we have also put investment in achieving increased efficiency, mainly on distribution systems and results are showing that it's paying off. These two things have been able to absorb part of the increases in the market. We are lucky to be able to interconnect with larger grids, like China's Southern Power Grid, which helps us stabilize and cope with increasing demand. In the future we want to have a larger amount of gas available allowing us to make more investments in power generation.
Has there been any major protest from consumers in terms of increase of tariffs?
Nowadays people realize that most of power companies are facing the issue of rising primary energy prices. Tariff increase is not at all popular; nobody wants to get into that. In Macau, CEM has used been using a long term strategy for the past century so we don't see our business at the short term. Therefore with primary energy prices very high we see it fit to give our contributions to stabilize the tariff problem to keep increases minimal for the public.
For the last couple of years, there has been no significant tariff increase so as not to place additional pressure on customers in light of inflation. That's probably the little contribution of our company which is possible through a very close collaboration with the government.
What benchmarks does CEM have in terms of quality?
Pertaining to quality in energy generation, CEM has had a good track record in terms of reliability. We're the first league in terms of ensured power supply which is very important considering Macau is known for its entertainment industry, which draws a lot of tourists. Macau received 27 million tourists last year, which makes energy reliability an strong issue that we have to commit to. Nowadays, if you think about events like the Beijing Olympics 100% reliability electricity supply is non-negotiable. This kind of solid reliability may seem impossible but this is what we are expecting from ourselves nowadays considering our role in Macau and what it expects of us..
How do tourists affect operations?
Basically Macau has been experiencing a very tremendous growth during the last few years. Last year we had an increase in electricity sales of 23%. Not many parts of the world have this kind of increase. Next year's target for increase is at 20%. All this increase is coming from the new entertainment investment that's being made in Macau. The Venetian-Macao Resort Hotel today is the largest of the said investments, but there are others in the pipeline, like the City of Greens which will open soon, and Macau Studio among other developments.
The good thing these days is that Macau has become a top class center not only for the entertainment industry but also exactly for things like conferences. The Venetian is a place where we decided to organize the CEPSI conference. It offers excellent infrastructure: a 3000-room hotel, expedition center, shopping mall, all in one place. In terms of infrastructure we are very confident that CEPSI will be a success.
What are the highlights of the CEPSI Conference?
CEPSI is a discussion between peers which makes it quite different: it's not about politicians or environmentalists talking about climate change, or about people trying to sell equipment or technologies. It is about our industry itself, how we are coping with this new challenge. We share ideas, we devise ideas. We don't have the ambition of trying to set guidelines for our members.
Everyone will be depending on the local conditions, their pace, and their course. The important thing is we want to learn from each other which is at the end benefits everybody
This year, the theme is "The Power Sector In A Fast Climate Changing World." In the past, all our activities were concerned mainly with delivering reliable power, service and affordable tariffs, but nowadays we have the feeling that in general there is much more pressure to introduce a new element in our decision making which the environment issue.
There will be panel discussions in trying to look into what is being done in terms of nuclear power and renewables, as well as clean coal technologies. We will also have technical visits on interesting sites like the largest coal-fired generator in the world located in Hong Kong, and gas recovery systems from a landfill.
There are also special discussions about efficiency. Smart grids when combined with a network, say, I.T. tools can allow for a better management of the grid, lessening losses, increasing overall efficiency. Another important issue for the industry are financial initiatives, risk and opportunities which are to be discussed by bankers and representatives of the financial world, like Asian Development Bank.
Combined with this program are 6,000 square meters of exposition area where institutions like the Southern Power Grid, the Tokyo Power Company, Taiwan Power Company and big suppliers like Siemens, ADB, Ariba, Mitsubishi will be able to share their areas of expertise in the industry.
Why is CEM so involved in local charities?
As a local company in Macau, having had 100 years of history there, we are involved about Macau. We feel it is our obligation as a corporation to contribute back to society. We sponsor environmental programs: energy saving, education, and social activities. We have launched special tariffs for the year for low-income people because we believe that this is part of the contribution CEM can make as a corporate citizen.
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