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Tariffs raised 5% to help power firms
Updated:Dec 1,2011  15:37

China yesterday announced an increase of about 5 percent in non-residential power tariffs and a temporary cap on coal prices to help prevent widespread electricity shortages with the onset of winter.

The tariffs were raised by 0.03 yuan per kilowatt hour on average nationwide, the National Development and Reform Commission said yesterday. 

The new rates became effective today. The NDRC raised retail power prices for industrial users in 15 provinces by about 3 percent in June.

The so-called on-grid tariffs charged by power firms to distributors were raised by 0.025 yuan per kWh on average nationwide, and by 0.026 yuan on average for all coal-fired power plants, the NDRC said.

The government is raising tariffs to help power firms, which have been losing money on thermal generation due to coal costs, as inflation pressure has eased in recent months. 

The inflation pressure has been easing month by month, and the power tariff adjustment wont change this trend, the NDRC said, adding costlier coal will curb demand from energy-guzzling industries.

Chinas peak power deficit may hit 30-40 gigawatts in winter and spring, the China Electricity Council has said. The nations power generation capacity was 960GW at the end of 2010.

In another move to mitigate the cost pressure on power firms, the NDRC said it will allow a maximum 5 percent increase in 2012 contract coal prices and cap the spot prices for the key coal traded in the northern port of Qinhuangdao at 800 yuan (US$125) a ton starting January 1.

Spot coal prices are quoted at around 850 yuan, up 9.5 percent from the beginning of this year.

The NDRC said at 800 yuan a ton, coal companies could still have good profit so that supply wont be affected.

The last time the government intervened in spot coal prices was in 2008, when a supply crunch - partly caused by the closure of small mines - pushed the rates to record high.

The NDRC also released a draft plan for the graduated tariffs mechanism on residential-use power to curb irrational consumption.

The mechanism was announced last year and is being tried out in several selected provinces.

The mechanism will divide residential power tariffs into three levels: those for basic needs, for normal and reasonable demand, and for high living quality needs.

The NDRC also said qualified low-income families may get 10-15 kWh free electricity every month, thats equivalent to an annual fee rebate of 60-90 yuan per household.

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