China Government Raises Price of Electricity

The National Development and Reform Commission (NDRC) released its plan on June 19th to raise the average sales price of electricity in China by RMB0.025/kWh starting on July 1st. This change will mainly affect industrial and commercial power consumers, while the NDRC will also adopt provisional price control measures on coal products.

The increase in the price of electricity consumed by industrial and commercial enterprises will have little impact on the general price of the commodity, said representatives from NDRC. As the household electricity price will also not be raised, the price adjustment will not directly influence the CPI. In addition, the NDRC has decided that this price increase will not be applied to the agricultural and chemical fertilizer manufacturing fields, thus allowing the grain price and agricultural manufacturing cost to stabilize and easing the pressure of the rising commodity prices.

Due to the high coal price, the NDRC decided to implement provisional price control measures on electrical coal for the period June 19th to December 31st, 2008 in order to prevent the continuous coal and electricity price hikes. In the period, the ex-mine price of coal supplied by coal producing enterprises to power plants may not exceed the actual transaction price on June 19th, 2008.

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