Higher power tariffs to prevent summer blackouts

Shanghai (AsiaNews/SCMP) – Power tariffs will rise by an average of 2.2 fen (circa 0.2 Euro) per kilowatt-hour. According to the Chinese government, this step is necessary to limit power shortages that might affect the country this summer.

Xinhua announced that China could be in for the worst drop in power supplies since the 80s. An executive of the National Power-Grid Company has confirmed this possibility and the shortfall could reach as much as 300 million kW. The National Development and Reform Commission has prepared new guidelines that will be in force throughout the entire country. Speaking to China News Service, a member of the Commission pointed out that "tariff increases is part of the government's overall economic policy which is to rein in some over-heated sectors of the economy and save energy while pushing power-generating companies to invest in new infrastructures and reduce the cost of coal. This choice is necessary if we want the national economy to maintain a stable and relatively fast growth".

Increased tariffs will affect commercial firms and industrial companies alike; however, they will be divided into four distinct categories each subject to its own increase. Some will see the increase "limited" to 2 fen compared to the base price. Others will see the increase "eliminated" (5 fen more). While other will see it "permitted" or "encouraged". Among the latter categories one finds  agricultural and small-scale fertiliser producers who should benefit from reduced costs as a way of increasing farming revenues.

The cost of power will vary in twelve provinces and cities, including Shanghai. The measures allow for higher tariffs during peak periods and lower tariffs during the rest of the day. In the meantime, the main power-generating companies have for the second time in a year increased the tariffs they charge power-grid companies. Their goal is two-fold: prepare for possible summer outages and make up for losses due to higher oil prices.

 "The magnitude of the tariff rises is disappointing," one analyst said. "The rises are insufficient to offset coal cost increases and still mean squeezed profit margins for private companies [Huaneng, Datang and Huadian, Editor's Note]".

• china
• economy
• energy
• blackout