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China Jacks up Industrial Power Prices, Adjusts Ceiling of Coal Prices

China, the world's largest energy consumer, will raise for the first time in two years prices for industrial power and thermal coal in a bid to ease power shortages and lower financial pressure on power companies.

Effective Thursday, retail electricity prices for non-residential customers will rise by 0.03 yuan, or US$0.47 per kilowatt hour (kwh) and the on-grid electricity price by 0.026 yuan per kwh. The increases represent a 5 per cent and 6.8 per cent growth, respectively.

Electricity rates of residential consumers will remain stable, but is still planned to increase after a gradual power tariff plan has been set, according to the National Development and Reform Commission. The multi-tiered system will most likely affect the top 20 per cent of residential users.

The series of price hikes come after China's State Electricity Regulatory Commission said in October that the world's second-largest economy faces power shortages during this coming winter, with soaring prices of coal exacerbating the situation.

In October, China's State Electricity Regulatory Commission said that falling hydropower output and coal shortages might cause a shortfall of at least 26 million kilowatts this winter. A commission official was quoted as saying rising coal prices could worsen the situation.

The National Energy Administration reported earlier this month that China's overall domestic power consumption in October grew 11.35 per cent from a year ago to 379.7 billion kwh. Residential users accounted for 12 per cent of total power consumption.

On Wednesday, the China Electricity Council said the country faces a power shortage of 30-40 million kilowatts this winter and next spring, much worse than the earlier forecast by the State Electricity Regulatory Commission of 26 million-kilowatt shortfall in October.

It was in November 2009 when the NDRC last raised non-residential retail and on-grid electricity prices nationwide. In June, it raised nonresidential retail electricity prices in 15 provinces.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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