Energy

'Modest' rise in electricity price planned

By Liu Yiyu (China Daily)
Updated: 2010-10-11 10:21

BEIJING - A multistep electricity pricing system, in which household tariffs will increase with usage, is being planned by the National Development and Reform Commission (NDRC).

The nation's top economic planner said on Saturday that the moves will help encourage energy conservation.

Under one proposal, the residential tariff for households with a monthly electricity usage under 110 kilowatt-hour (kWh) will remain unchanged at 0.48 yuan (7.2 cents) per kWh, but consumption between 110 kWh and 210 kWh will be charged at 0.53 yuan per kWh. Electricity used above 210 kWh will cost 0.68 yuan per kWh.

Another proposal calls for a higher basic level - 140 kWh instead of 110 kWh - to cover 80 percent of residential power users.

The proposals also encourage residents to adopt a time-of-use system, in which the price depends on the daily or monthly load factor.

"It's a very mild adjustment with modest increases in the tariff," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. "Most residents will not be affected much by the increase."

But the public have yet to be persuaded. A survey by the People's Daily website showed that almost 90 percent of respondents are worried.

The survey, published on www.people.com.cn, showed that 87.3 percent are concerned that this may lead to higher living costs.

Only 10 percent supported the scheme, citing energy savings as the main reason.

China's retail tariff is growing at an annual rate of 4 percent and has increased by 0.13 yuan per kWh after six adjustments since 2004, the NDRC said.

Last year's residential tariff of 0.48 yuan per kWh and industrial tariff of 0.56 yuan are much lower than the world's average, NDRC statistics said.

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Residential users account for 14 percent of China's total power consumption, with industry at 70 percent.

The NDRC said China's residential retail tariffs can barely cover the cost of power generation and the multistep pricing represents a fairer system in which higher users are required to pay more.

Zhejiang, Sichuan and Fujian provinces have adopted multistep power pricing and power consumption in Zhejiang and Sichuan has fallen substantially, said Li Ying, chief economist of the State Grid Energy Research Institute.

The NDRC said the extra revenue will go to power distributors or the State Grid and the China Southern Power Grid, and will be used to offset additional costs of energy-saving measures and increasing fuel prices.

However, power producers who have suffered losses from volatile fuel prices will not benefit from the tariff increases, said Cao Chanqqing, head of NDRC's pricing department.

"But this measure will pave the way for our next reform of the tariff toward a market-based pricing system."

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