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BEIJING, Dec. 3 -- Fushun Aluminum Plant, a unit of Chalco (2600.HK: Quote)(601600.SS: Quote), will save more than 30 million yuan ($4.40 million) in electricity costs in the fourth quarter due to cheaper rates under a pilot direct-trade scheme, state media reported on Wednesday.
&nbsp;&nbsp;&nbsp; China's power users have to buy electricity from grid operators, which in turn purchase power from generators, all at fixed rates set by the National Development and Reform Commission, a powerful ministry.
&nbsp;&nbsp;&nbsp; But Beijing introduced a pilot plan earlier this year, aiming to open 20 percent of the power market for direct trade between power generators and users.
&nbsp;&nbsp;&nbsp; Even so, it was difficult to reach any deals if the &quot;route fees&quot; charged by grid operators were not fixed, creating more uncertainty in negotiations between users and generators.
&nbsp;&nbsp;&nbsp; In October, Beijing set the first power transmission and distribution rate in the pilot plan for Fushun Aluminum Plant and Yimin Power Plant, a unit of Huaneng Group, at 0.117 yuan per kilowatt hour (kwh), excluding a basic charge.
&nbsp;&nbsp;&nbsp; Fushun and Yimin agreed last month to an on-grid power price of 0.2 yuan per kwh and electricity volume of 406 million kwh in the fourth quarter, the Chine Electric Power News reported.
&nbsp;&nbsp;&nbsp; The overall power price that Fushun would pay in the current quarter, including on-grid power price, grid charges and other government levies, was between 0.396 and 0.398 yuan per kwh -- lower than the 0.41 yuan a kwh it paid before or the 0.474 yuan that the local grid firm charges major industrial users -- the report said, citing a plant official.
&nbsp;&nbsp;&nbsp; The on-grid price that Yimin agreed to was only two-thirds the normal on-grid rate it sells to the grid operator, which &quot;would be unacceptable for most other power plants&quot;, Yin Long, general manager of Yimin, was quoted as saying.
&nbsp;&nbsp;&nbsp; Yimin, a power plant built next to a rich coal mine, has unusually low coal costs, and the deal would boost its plant utilisation rate by nearly 200 hours in addition to the 4,000-4,200 hours a year that had been included in the grid's operational plan, Yin said.
&nbsp;&nbsp;&nbsp; China's power generators are eager to have higher exposure in the grids' operation plan because any capacity left out of the plan is effectively forced to remain idle.
&nbsp;&nbsp;&nbsp; The grid operator also surrendered 0.003 yuan per kwh to facilitate the direct power trade between Fushun and Yimin, the newspaper report added.
&nbsp;&nbsp;&nbsp; Power costs account for more than 40 percent of aluminum smelters' operational costs.
&nbsp;&nbsp;&nbsp; (Source: Reuters) 
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Pilot Deal to Cut China Smelter's Power Bill - Paper

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