Electricity price rises for non-residential use
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China's National Development and Reform Commission (NDRC), the top economic planning agency, Thursday announced a rise in the price of electricity for non-residential use by 2.8 fen (0.4 U.S. cents) per kilowatt hour on average nationwide, as of Friday.
Residential electricity prices would not be raised this time. However, they would be charged on a progressive basis in the future, which meant prices would increase with consumption, said Cao Changqing, director of the NDRC's department of pricing.
The price increase would promote energy conservation awareness and the building of a resource efficient and environment-friendly society, added Cao.
China increased the price of coal-fired electricity, which power grid operators buy from power plants, by 2 fen on average last August, in a bid to ease cost pressures for power plants from rising coal prices.
However, the retail prices of electricity had not been raised since then, which resulted in losses for grid operators, he said.
State Grid Corporation of China and China Southern Power Grid, the country's two leading power grid operators, lost a total amount of 16.1 billion yuan over the first eight months, the NDRC said in a statement on its website.
"If the electricity price could be raised by 1 to 1.5 fen per kilowatt hour, the State Grid Corporation of China could make up the losses incurred in the first half of this year within six months and have optimistic prospects for profitability," said Xie Dacheng, an industry analyst with Guangdong-based Guosen Securities.
Official figures showed that China's power consumption in October rose 15.87 percent year on year to 313.42 billion kilowatt hours, up for the fifth consecutive month since June.
The progressive pricing mechanism for residential users would be carried out in line with actual situations in different areas and after discussions and research, Cao said.
Residential electricity accounted for 12.8 percent of the country's combined power consumption in the first half, according to the China Electricity Council.
