China is likely to increase tariffs on electricity sold by power grids as a fall in inflation provides more policy flexibility for the government, said officials from the State Electricity Regulatory Commission (SERC), as reported in the China Securities Journal on Friday.

SERC Chairman Tao Rongyao said at a news conference that the Commission has submitted a report to the State Council, proposing measures to improve electricity pricing policies and mechanisms. These measures include allowing electricity prices to be determined by the market.

Huang Shaozhong, a deputy director with the Commission, noted that on-grid tariffs for electricity won't be raised in the short term, to prevent power grids from suffering further losses.

China increased on-grid power tariffs by up to 0.035 yuan per kilowatt hour (kWh) on July 1 and by an average 0.02 yuan per kWh on August 20. As a result of these increases, State Grid and China Southern Power Grid will pay an additional 4 billion yuan per month on electricity purchase.

China's consumer price index (CPI), an indicator of inflation, rose by 4.9 percent in August. The figure, compared with 6.3 percent in July, 7.1 percent in June and 7.7 percent in May, was lower than most forecasts.

For more details, please read the complete story in Chinese:

(http://paper.cs.com.cn/html/2008-09/12/content_17941913.htm)

(China.org.cn by Yan Pei, September 12, 2008)