China Raises Power Prices for Business, Farmers as Summer Shortage Looms
By Bloomberg News - May 31, 2011
China raised electricity prices for businesses and farmers for the first time in more than a year, threatening to exacerbate inflation as the nation aims to curb power shortages that may be the worst on record.
Rates for industrial, agricultural and commercial users in 15 provinces will increase starting tomorrow while those paid by residential customers will be unchanged, said an official at the National Development and Reform Commission, declining to be identified because of internal rules. Malaysia said yesterday it will raise power prices for the first time in three years.
The increase in electricity costs may complicate China’s fight against inflation, which is above the government’s target. The world’s biggest energy consumer may boost residential rates in the second half, according to Citigroup Inc. Higher prices may spur generation as pressure eases on profit margins squeezed by rising coal costs. An electricity shortfall this summer may be as much as 40 gigawatts, surpassing the 2004 record, State Grid Corp. of China said.
“This will help power producers and give them more incentive to maximize production amid the power shortage,” Zhang Long, a utility analyst at Essence Securities Ltd., said by telephone from Shanghai.
The country’s five largest generators are China Huaneng Group Corp., China Datang Corp., China Power Investment Corp., China Guodian Corp. and China Huadian Corp.
Huaneng Power International Inc. (902), a unit of China Huaneng, rose 0.9 percent in Hong Kong trading to HK$4.55. Its rival Datang International Power Generation Co. fell 0.3 percent and Huadian Power International Corp. advanced 1.8 percent. The benchmark Hang Seng Index rose 2.2 percent.
bloomberg.com
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