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Losses may spark higher power prices
Source: Xinhua |
November 15, 2011, Tuesday
|
Print Edition
Print Edition
A nationwide electricity-price increase is looming in China as many plants are suffering significant losses, while previous concerns about a rate hike that would hurt the country's efforts to control prices have abated due to the latest inflation data.
A source yesterday said a proposal to raise electricity rates has recently been submitted to the central government.
"It's highly probable the proposal will be passed if October's Consumer Price Index showed a clear downward trend," the source said.
China's CPI, a main gauge of inflation, rose 5.5 percent in October, the slowest in five months, although it still exceeded the government's full-year target of 4 percent.
Analysts had worried that increasing power tariffs could jeopardize the country's efforts to put runaway inflation under control, which was set as the top economic priority by the central government earlier this year.
Now that this concern has eased, China's power firms are hoping the rate hike can be approved to help cover their whopping losses.
A rough calculation reveals that a rise of 0.01 yuan per kilowatt-hour in on-grid power tariff can cover power plants' costs from a 25 yuan (US$3.93) per ton increase in the coal price.
Data showed the five largest power generation companies, including Huaneng, Huadian and Datang, posted combined losses of 7.46 billion yuan in their electricity generation businesses during the first seven months of this year.
A majority of thermal power plants in central and northeast China are suffering losses and the losses have been rising, according to a report released by the China Electricity Council.
By last Wednesday, the average price of thermal coal remained at a historic high of 853 yuan per ton for three consecutive weeks, according to the Bohai Rim Steam Coal Price Index.
A source yesterday said a proposal to raise electricity rates has recently been submitted to the central government.
"It's highly probable the proposal will be passed if October's Consumer Price Index showed a clear downward trend," the source said.
China's CPI, a main gauge of inflation, rose 5.5 percent in October, the slowest in five months, although it still exceeded the government's full-year target of 4 percent.
Analysts had worried that increasing power tariffs could jeopardize the country's efforts to put runaway inflation under control, which was set as the top economic priority by the central government earlier this year.
Now that this concern has eased, China's power firms are hoping the rate hike can be approved to help cover their whopping losses.
A rough calculation reveals that a rise of 0.01 yuan per kilowatt-hour in on-grid power tariff can cover power plants' costs from a 25 yuan (US$3.93) per ton increase in the coal price.
Data showed the five largest power generation companies, including Huaneng, Huadian and Datang, posted combined losses of 7.46 billion yuan in their electricity generation businesses during the first seven months of this year.
A majority of thermal power plants in central and northeast China are suffering losses and the losses have been rising, according to a report released by the China Electricity Council.
By last Wednesday, the average price of thermal coal remained at a historic high of 853 yuan per ton for three consecutive weeks, according to the Bohai Rim Steam Coal Price Index.
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