China to cut on-grid thermal power tariffs

Chinese state media has stated that the country will cut on-grid wholesale prices of thermal electricity, probably from the second quarter of the year, as coal prices tumble.

The downward trend in coal prices, could be reinforced by the second price cut since September, piling more pressure on the country's coal mining sector, where over 70% of mines are suffering losses.

The move will come after a sustained collapse in coal prices, brought about by a huge supply glut of the thermal fuel.

On-grid tariffs are the rates power generators charge grid companies, and prices vary from province to province. Coal now fires roughly 75% of China's power generation, the world's largest.

The upcoming cut would also affect retail electricity prices and help energy-intensive manufacturing, such as cement and electroplated aluminium production, the paper said.

Policy-setters are finalising an ambitious power sector deregulation plan that allows power generating firms to compete in spot markets supplies into grid operators, and also frees up the retail power markets to boost private investments.

Edited from source by Joseph Green

Source: Thomson Reuters

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