SMM News: in response to the requirement of a further 10 per cent reduction in the average price of electricity for general industry and commerce put forward in this year's government work report, the National Development and Reform Commission announced the second batch of price reduction measures on May 15, involving the reduction of additional charges for electricity prices. As well as the price reduction space of trans-provincial and cross-regional special projects transmission prices and non-market electricity of hydropower and nuclear power vacated by the decline of value-added tax rate, the combination of electricity price reduction is made.
The National Development and Reform Commission has demanded that the price reduction space formed by a 50% reduction in the collection standard of major water conservancy projects construction funds (except for market-oriented trading electricity), all of which will be used to reduce electricity prices for general industry and commerce. Prior to this, the executive meeting of the State Council held on April 3 had decided to reduce the collection standard of the national major water conservancy project construction fund by half from July 1.
The fund has been downgraded for the third year in a row since 2017. The National Major Water Conservancy Project Construction Fund is a government fund set up by the state to support the construction of the South-to-North Water diversion Project, to solve the follow-up problems of the three Gorges Project, and to strengthen the construction of major water conservancy projects in the central and western regions. According to the interim measures for the Administration of the Collection and use of the National Major Water Conservancy Project Construction Fund issued by the Ministry of Finance and other three ministries in 2009, with effect from January 1, 2010, the collection of the three Gorges Project construction fund will be stopped, but the additional electricity price for its financing will not be cancelled. It will continue to be levied in the name of the newly established National Fund for the Construction of Major Water Conservancy projects. From January 1, 2010 to December 31, 2019, the fund levied electricity sales throughout the country except for agricultural drainage and irrigation in the Tibet Autonomous region and key counties of the state's poverty alleviation and development work.
According to the preliminary estimate of the electricity consumption of the whole society in 2018, the reduction of the collection standard of the national major water conservancy project construction fund involves a reduction of about 7.221 billion yuan.
The price reduction measures proposed by the National Development and Reform Commission also include appropriately extending the depreciation period of fixed assets of power grid enterprises and reducing the average depreciation rate of fixed assets of power grid enterprises by 0.5 percentage points. After the value-added tax rate and the average depreciation rate of fixed assets are reduced, the transmission prices of special projects across provinces and regions will be re-approved, The price reduction space formed by the price reduction of the special project is distributed according to the proportion of 1:1 between the power transmission province and the power receiving province (the price reduction space formed by the point-to-network project which has no physical connection with the power transmission province is used by the power supply province). The price reduction space formed by the above measures is all used to reduce the price of electricity for general industry and commerce.
In addition, due to the reduction in the value-added tax rate to 13%, the price reduction space formed by non-market trading electricity quantity of hydropower enterprises in the province, foreign hydropower and nuclear power enterprises across provinces and regions (except for the third generation nuclear power units), All of them are used to reduce the electricity price of general industry and commerce. Among them, for large hydropower stations and nuclear power plants that were previously issued by the National Development and Reform Commission to clarify the feed-in electricity price, the feed-in electricity price is calculated by the provincial price department of the receiving province taking into account the reduction of value-added tax rate. Report to the National Development and Reform Commission (Price Department) for the record and announce the implementation.
In addition to the above policy adjustments, the National Development and Reform Commission encourages ordinary industrial and commercial users to actively expand the scale of participation in power market transactions and further reduce the cost of electricity consumption through market mechanisms.
Reducing energy costs has continued to appear in government work reports in recent years. On March 5, in a report on the work of the government, Premier Li Keqiang of the State Council proposed to promote the reduction of enterprise-related fees and charges through reform. We will deepen market-oriented reform of electric power, clean up additional charges on electricity prices, and reduce the cost of electricity consumption in manufacturing industries, and the average electricity price for general industry and commerce will be reduced by another 10%. This is following the 2018 proposal of "general industrial and commercial electricity prices reduced by an average of 10%", the government work report once again proposed to reduce the power burden of enterprises quantitative indicators.
Electricity price is the most sensitive factor of production for industrial and commercial and large industrial users. "reducing electricity price" often has an immediate effect on reducing the cost of enterprises. The so-called general industrial and commercial power consumption refers to ordinary industrial and commercial electricity consumption other than domestic electricity, large industrial power consumption and agricultural production electricity consumption. Reducing electricity prices is an important measure to improve the business environment. According to the price department of the National Development and Reform Commission, the total amount involved in reducing the general industrial and commercial electricity price in 2018 is about 83 billion yuan, and the goal of "reducing the price by 10 per cent" last year was mainly achieved through the power grid link.
At the end of March, the National Development and Reform Commission issued a circular requiring that after the VAT rate of power grid enterprises be adjusted from 16% to 13%, the space for the reduction of the level of tax transmission and distribution electricity prices for provincial power grid enterprises will all be used to reduce the electricity prices for general industry and commerce. In principle, it will be implemented as of April 1. This is the first batch of price reduction measures aimed at "a further 10% reduction in the average electricity price for general industry and commerce."
In order to effectively transmit the dividend of reducing the electricity price policy for general industry and commerce to end users, the National Development and Reform Commission requested in a circular on 15 May, The competent price departments of all provinces (autonomous regions and municipalities) should promptly study and put forward a specific plan to make use of the above-mentioned price reduction space to reduce the electricity price of local general industry and commerce accordingly, and issue a document before the end of May in accordance with the procedure, which will be formally implemented on 1 July. At the same time, it will be reported to the National Development and Reform Commission (Price Department) for the record. In addition, the level of general industrial and commercial transmission and distribution electricity prices in various provinces (autonomous regions and municipalities) should be reduced accordingly. The competent price departments of all provinces (autonomous regions and municipalities) and power grid enterprises should ensure the smooth implementation of the above-mentioned electricity price reduction policy, and conscientiously clean up and standardize unreasonable charges and failure to conduct power supply in time, such as commercial complexes, industrial parks, office buildings, and so on.