November 22, 2008

China raises on grid power rate to help generators

Reuters reported that China has raised on grid power tariffs for the first time since June 2006 by an average of around CNY 0.02 per kilowatt hour to help power generating companies struggling with surging coal costs.

A source said that "The document has been issued and implemented. It said that specific changes to on-grid rates for different regions and generators varied, but in general accounts for about 80% of the retail price hike."

Sources familiar with China's power pricing added that the move would effectively ease the pressure on generators such as Huadian Power and China Power International Development Ltd, though not enough to cover all their operating losses.

An official with Huaneng Group, the parent of Huaneng Power International Inc said that these rises would offset some of the increase in coal costs but was unable to provide any quantitative estimates as the company was still calculating their impact.