China said yesterday it has raised on-grid power tariffs from Tuesday - for the first time in more than two years - to help power plants which are struggling with surging coal prices.

The increases in on-grid prices, which are charged by power producers to distributors, vary for different regions and generators.

It rose by 0.035 yuan per kilowatt hour in Yunnan Province, 0.0043 yuan/kwh in the eastern part of Inner Mongolia and 0.0214 yuan/kwh in Shanghai, the National Development and Reform Commission (NDRC) said.

The NDRC on June 19 said it would raise average retail electricity prices by 0.025 yuan/kwh, or about 4.7 percent, effective from Tuesday. In Shanghai, the retail price rose 0.03 yuan/kwh, government spokesman Chen Qiwei said.

The retail tariff rises apply to industrial and commercial users and won't affect residential, agricultural and fertilizer sectors, the NDRC has said.

Chen said Shanghai is improving its pricing mechanism to include more charging differentials depending on the seasons and periods to promote conservation and secure supply.

The on-grid price rise would help shore up the bottom lines of power plants, though not enough to cover the soaring coal costs, analysts said.

Huadian Power International Corp said its average on-grid tariff increased by 4.77 percent, calculated on the weighted average capacity. The NDRC didn't say what's the average rise for on-grid prices nationwide. UBS analyst Stephen Oldfield has said last month the on-grid prices might be raised by about 5 percent.

If power grids fully pass on the retail price rises to generators, the on-grid tariff could be increase 7 percent on average. But that could not happen because not all the power sold by distributors is subject to higher retail prices in the latest adjustment.

(Shanghai Daily July 3, 2008)