CHINA-ENERGY: POWER CUTS IN CHINA LEAD TO RISE IN ELECTRICITY PRICES
China News (October 1) reported that since August, over 20 provinces in China have issued notices
to limit electricity usage. This has caused blackouts in certain regions. The power plants are faced
with increased electricity demand while there is a coal shortage and thus coal prices are higher.
They are operating at a loss because the electricity price is set according to State Council guidelines.
Starting in July, over eight provinces have increased the price of electricity, but they are still within
the 10 percent ceiling previously required by the State Council. Several provinces introduced peak
demand pricing to normalize the usage. Currently the electricity price increase is aimed at business
electricity consumption rather than at residential use. On September 29, the National Development
and Reform Commission issued a notice calling for increased coal production while enabling the
coal power plants to set a price that is market driven and reflects the changes in demand and cost.
The central authorities said it is expected that this wave of price increases will continue to expand.
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