The Chinese government has decided to phase out the policy of charging relatively lower prices for electricity consumed by enterprises producing electrolytic aluminium, ferrous alloy and chlor-alkali.

The National Development and Reform Commission, the Ministry of Finance and the State Electricity Regulatory Commission jointly issued a notice announcing the policy change as part of the country's efforts in energy conservation and pollution reduction.

The government notice also stated that the extra power fees levied on high-polluting and energy consuming enterprises and collected by power grid companies shall from now on be handed in to local provincial level government treasuries. The fees will be incorporated into the local governments' financial budget to be used in optimizing the local economic development structure.

The central government asked local governments to divide enterprises into three categories, namely those to be encouraged, those to be limited and those to be shut down, based on the level of their pollution discharges and energy usage.

The local governments should compile lists of the differentiated firms and report them to the National Development and Reform Commission and the State Electricity Regulatory Commission. The lists should also be made public via local media.

The notice adds the central government will conduct a nationwide inspection on the execution of power pricing policies by local governments and power grids.

(CRI October 12, 2007)