...Introduction This case study Luotang Power: Variances Explained is mainly concerned with a study of variances that will show the changes in performance in the company and the external environment that is not within the power plant’s control. The Luotang Power Company (Luotang) is a 600 Mega Watt (MW) coal fired power plant located in the Hubei Province, China. Luotang first started in 1997, when the Provincial Planning Commission, working on behald of the Hubei Provincial Government, had solicited bids from international power developers to finance, design, build, and poerate a 600MW coal-fired power plant. The project was contracted on a Build Operate Transfer (BOT) Basis, that meant that the power plant would be given to the Hubei Provincial Government after 20 years of operation at no cost. Luotang was mainly rural in nature but development quickly increased when the power plant opened. Luotang is wholly owned by an American independent power producer. Luotang’s parent company is known as China Hua Tong Power (HT Power). It’s primary customer is the Hubei Provincial Power Company (HPPC) and their main coal supplier was the Pindingshan Coal Company (Pindingshan). Tan Min Yi has been the general manager of the Luotang Power Company since 2002. In this case study, it talks about how Tan has to make a presentation to the Board of Directors of Luotang’s parent company, that is HT Power about the results received in the 2011 Report of Operations. He is concerned about what...
Words: 3218 - Pages: 13
...CHAPMAN Luotang Power: Variances Explained Introduction As soon as Tan Min Yi received the 2011 Report of Operations for the Luotang Power Company, he called company Controller Fiona Zhu and Sales Manager Ricky Wang into his office to discuss the results. Tan was general manager of the Luotang Power Company, a 600 Mega Watt (“MW”)1 coalfired power plant, located in Hubei Province, China. He was scheduled to make a presentation to the Board of Directors of his parent company, China Hua Tong Power (“HT Power”), the following week about the most recent results and was concerned about their reaction to the disappointing results.2 Tan knew his company had performed well during the year. Both plant availability3 and fuel economy had improved over the previous year. Additionally the plant’s primary customer, the Hubei Provincial Power Company (“HPPC”), had met its contractual electricity purchase obligations for the year. However, there had been limited opportunity to sell energy above the contractual minimum, either to HPPC or others. Still, Tan felt that these factors were outside his control. His team had performed well—it just didn’t show up in the financial results. The scheduled presentation to the Board was important for two reasons. First, HT Power was considering a 2,000 MW expansion at Luotang. However, on a more personal note for Tan, he had been general manager of Luotang since 2002, and he hoped it would be time for a promotion. He hoped that HT Power would...
Words: 3675 - Pages: 15
... INTEGRATED CADE STUDY ”CASE 2: LUOTANG POWER : VARIANCES EXPLAINED” GROUP : L (3) PREPARED FOR: PROF. MADYA. DR. ENGKU ISMAIL B. ENGKU ALI PREPARED BY: NURIN NAZMIN BT AHMAD FISOL 207704 TENGKU NADIRAH BT TENGKU DANIEL 207733 SABIRAH BT ABDULLAH 207783 NAJIHA BT MOHD MISBAHHUDDIN 207785 NUR AMALINA BT ABD GHANI 207791 SUBMISSION DATE : 06 OCTOBER 2013 Table of Contents 1.0 INTRODUCTION 4 2.0 MAIN ISSUE 5 3.0 FINDINGS 7 4.0 STANDARD COST 12 5.0 RECOMMENDATION 13 6.0 CONCLUSION 15 1.0 INTRODUCTION Tan Min Yi who was the general manager of Luotang Power, a coal-fired power plant located in central China. He should make a presentation to the Board of Directors of his parent company, China Hua Tong Power (HT Power). Tan knew that his company had performed well during that year, both plant availability and fuel economy improved over the previous year but it just didn’t show up in the financial report. Hubei Provincial Power Company (HPPC) was the primary customer of Luotang that had made a contract for a minimum annual purchase of total electricity of 3,000,000MWh every year. However, there had been limited opportunity to sell energy above the contractual minimum, either to HPPC or others. If the amount of sell would be reduced, the contract required that Luotang sell amounts in excess of minimum annual purchase at approximately 65% of regular price. Luotang also made a contract with coal supplier...
Words: 2706 - Pages: 11
