China power tariffs "have little room to rise"

SHANGHAI, March 9 - There is limited room for China's power tariffs to rise this year as coal prices are sliding and oil has plunged, the Shanghai Securities News said on Monday, quoting a senior official.

Peng Sen, deputy head of the National Development and Reform Commission (NDRC), said it was also unlikely that power tariffs would be lowered because power firms are bearing serious losses.

China's top five power-generating groups, China Huaneng Group, China Datang Corporation, China Guodian Corporation, China Huadian Corporation and China Power Investment Corporation, and coal miners have been in deadlock in negotiations over this year's supply contracts for more than two months.

"(The five groups) are still in discussion with Shenhua, China Coal and other suppliers. We encourage them to base their judgment on supply and demand and solve the problem accordingly," Peng was quoted as saying.

Peng said power generation had increased and there was enough coal at major power plants for 18 to 20 days.

China's state-set power tariffs lagged skyrocketing coal prices last year, causing huge losses to power companies. The NDRC would try to solve the problem this year, Peng said.

The NDRC had also ordered local governments to stop granting discounted power tariffs to energy-intensive industries, the paper said.

Those policies had sent confusing signals on power tariff policies and would not help upgrade industry, the paper quoted a government document as saying.

Provincial and regional governments should cancel such policies by March 15.

But the NDRC plans to launch a pilot programme with 15 aluminium smelters allowing them to buy electricity directly from power-generating firms at prices lower than from grids, the paper said.