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Electricity prices reflect coal slump

World Coal,

China’s state planning agency has lowered the price of thermal electricity in order to reflect a fall in coal prices.

Chinese coal prices fell approximately 16% in Q1-3 2013 due to slow demand, putting miners under strain but reducing costs for power producers.

Power prices are set by the state, meaning that utilities do not have the flexibility to adjust tariffs in line with changes in the market. Earlier this year, the state announced that it was examining ways to make the pricing system more market-oriented.

SDIC Power told the Shanghai Stock Exchange that price cuts at its power plants would range between approximately 0.01 and 0.025 yuan per kWh, depending on the region.

While utility profits will suffer as a result of the price changes, SDIC Power said it would be paid an additional 0.01 yuan per kWh for complying with new standards to cut nitrogen oxide emissions, and 0.02 yean per kWh for reducing soot.

China has found it hard to persuade power plants to meet tough new thermal power emission standards, and decided to offer new subsidies to cover the costs of installing new technology in August 2013.

Adapted from press release by Katie Woodward

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