New electricity price policy has limited impact on commodity prices

08:47, October 12, 2010      

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The National Development and Reform Committee released the "Guidance (Draft of Suggestions) of Launching Different Tariffs on Residential Electricity Consumption" on Oct. 9. Many electricity professionals believe it will help to correct China's long-time low electricity pricing system and can ensure fairness to low-income groups as well as help to promote energy-conservation and emissions reduction.

Part of the increased electricity charges will be distributed to electricity power enterprises as subsidies through the power grid. Electricity power enterprises will benefit from the subsidies in limited extent. Experts said the increased expenditures are still within the range of residents' financial capacities and therefore, it will have little impact on current inflation and the living stress of residents.

The policy of implementing different tariffs on Chinese residential electricity consumption has been brewing for a long time. The current draft of suggestions shows that the residential electricity price will be divided into three levels and will adopt a progressive increase in levels.

The electricity quantity of the first level will be fixed in accordance with the basic power demand of residents, indicating that electricity prices for most residents will remain stable. The electricity quantity of the second level reflects the normal and reasonable power demand of residents and the electricity quantity of the third level reflects the power demand of residents with a higher quality of life.

The increased income after implementing the different electricity tariff policy will be mainly used for power grid enterprises and making up the additional environmental expenditures, such as energy-conservation and emissions reduction, the expenditures of reconstructing residential ammeters and the increased costs of power grid enterprises' power purchases as a result of increased fuel costs.

Officials from the National Development and Reform Committee have said there will be little impact on residents' electricity costs after the implementation of the new policy. Electricity costs of 70 percent to 80 percent of residents, including low-income families and families with financial difficulties, will basically remain stable.

Some experts also pointed out that the government should adopt the more effective "Time of Use (TOU) tariff" policy. Cai Guoxiong, a committee member of the CPPCC National Committee and deputy chief engineer of the China Electric Power Research Institute, said the "TOU policy" is more suitable for the Chinese power generation structure of vigorously enhancing green energy such as wind and nuclear energy and is more effective on encouraging users to conserve energy.

By People's Daily Online


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