CRI听力:China Hikes Power Prices to Ease Power Shortages

The National Development and Reform Commission has announced that starting Thursday, it will raise the retail price of electricity for non-residential use by an average of 0.03 yuan, or 47 U.S. cents per kilowatt-hour.

The move marks the first nationwide power price hike since November 2009.

It also comes at a time when many of China's power-generating companies are in the red because of continued increases in coal prices.

Xia Qing, an electricity industry analyst and professor at Tsinghua University, says the latest price hike is unavoidable.

"According to our calculation, over the years, coal prices have risen by 150 percent. But the electricity price only increased 30 percent. It is a striking contrast. So the price hike in electricity cannot be avoided."

Earlier statistics indicate, China's five largest power plants experienced a collective loss of 26.6 billion yuan in their thermal power ventures during the first three quarters of the year.

Xia says the price hike will help reduce the operating costs of these power companies.

"The financial losses have resulted in a power shortage, which has been brought about by the coal shortage. Now the fuel costs of Chinese power plants take up 70 percent of the total, while they are only 30 to 40 percent for U.S. companies."

The NDRC says residential electricity prices will remain unaffected, but it is planning to introduce a new tariff structure for residential electricity use, which means prices will increase according to consumption levels.

The top 5 percent of consumers will be charged the highest price, as their power consumption accounts for 24 percent of total residential consumption. But 80 percent of consumers will not be affected by the price hikes at all.

Xia applauds the decision.

"The power tariff mechanism is a wise policy. It sends a signal to society that we must save energy. We have to secure our basic requirements here in China first by restraining excess consumption before things can return to normal."

Professor Xia says government price controls may help reap short-term benefits, but they are not a permanent solution. In the long run, China should boost supplies and transportation of thermal coal and strengthen supervision of price changes to ensure a more stabilized coal market.

For CRI, I'm Shuang Feng.