China Raises Electricity Prices to Ease Power Shortages

 
BEIJING, May 30 -- China has raised prices for electricity used for industrial, commercial and agricultural purposes across the country's 15 provinces and municipalities by 16.7 yuan (about 2.57 U.S. dollars) per 1,000 kilowatt-hours (kwh), the country's top economic planner said on Monday.

Electricity prices for residential use remained unchanged, the National Development and Reform Commission (NDRC) said.

The move is intended to ease regional power shortages, restrain the development of energy-guzzling industries and ensure a steady supply of electricity for residential use, according to the commission.

The rise will have a limited impact on the country's consumer price index (CPI), a main gauge of inflation, which rose 5.3 percent year-on-year in April, well above the government's annual inflation control target of 4 percent, according to the NDRC.

Shanxi Province, the country's leading coal producer, saw the largest price increase. Prices of electricity there rose by 24 yuan per 1,000 kwh, compared with a rise of 4 yuan per 1,000 kwh in southwest China's Sichuan Province.

Provinces and municipalities affected by the price hikes are Shanxi, Qinghai, Gansu, Jiangxi, Hainan, Shaanxi, Shandong, Hunan, Chongqing, Anhui, Henan, Hubei, Sichuan, Hebei and Guizhou.

The hikes will only help electricity producers to cover losses caused by rising coal costs, rather than negate losses generated by rapidly expanding industrial development, said the NDRC.

Electricity producers in the country have recently dealt with heavy losses, as coal prices are set by the market, while the government sets electricity prices.

To prevent coal producers from taking advantage of the situation, the NDRC has started checking contract coal prices for evidence of manipulation. Coal producers who are found to be manipulating their prices will be asked to return money earned through the practice, the NDRC said.

China's total electricity consumption rose 12 percent year-on-year in the first four months of this year. Power consumption rose by 11.2 percent year-on-year in April to reach 376.8 billion kwh, compared with 388.8 billion kwh of electricity used in March.