China's five leading power companies – China Datang Corporation, China Huaneng Group, China Hudian Corporation, China Power Investment Corporation (CPI) and China Guodian Corporation – have all handed in their application to the National Development and Reform Commission (NDRC) for raising electricity prices in areas where coal prices have soared recently.

 

This is the third such action made by the power industry to the government. Since the first two petitions, made on their behalf by the China Electricity Council (CEC), went unanswered, the companies decided to strike out alone.

 

In 2005, the Chinese government created a peg between coal and electricity prices, stipulating that the latter should rise or fall following average coal prices within a 5 percent bracket for a half-year period. In line with this, China altered its electricity prices in 2006 and 2007.

 

Zhou Fengqi, an expert with the NDRC's Energy Research Institute, explained that the government had not raised power prices for several reasons. First of all, all average prices have soared producing a 4.4 percent CPI hike. Secondly, a power shortage is not an issue this year, given the excess electricity output produced. Perhaps here lies the NDRC's reluctance to raise electricity prices.

 

For more details, please read the full story in Chinese. (http://finance.jinghua.cn/c/200707/25/n531901.shtml)

 

(China.org.cn July 25 2007)