July start for graduated power tariff


China is to implement a graduated power tariff mechanism for households from next month as part of government efforts to conserve energy.

All provinces and municipalities were told to implement the new system before the second half of the year with the stipulation that local plans should leave 80 percent of households unaffected, the National Development and Reform Commission, China's top economic planning body, said.

In Shanghai the new system will result in a 4 percent rise on average in residential power prices but will not affect 80 percent of families, local authorities said.

After public hearings on how the new system could operate, Shanghai is expected to announce the details of its plan today.

Most people who took part in the hearings in the city last month preferred a plan that uses one year as a calculation period.

In the one-year plan, a household pays what it currently pays until consumption hits 3,120 kilowatt hours (260 kwh a month times 12), and then pays higher rates during the rest of the year.

The city has set a "basic needs" figure at 260 kilowatt hours a month, the average consumption of 80 percent of the city's 7.72 million households last year. Increased charges will kick in once consumption is beyond this figure.

Shanghai had also proposed a plan under which the basic needs figure would be raised to 350 kwh per month in July and August and in December and January when people need air-conditioning to keep cool or heating to stay warm. For the rest of the year it would be reduced to 210 kwh.

The NDRC, which sets energy prices in China, said yesterday that the basic needs figure in many provinces had been extended to leave more households unaffected. In some provinces, 90 percent of residents will see no increase in their bills.

Lin Boqiang, a Xiamen University professor, estimated that the tier-based electricity pricing would help power companies gain up to 6 billion yuan in extra revenue each year without taking into account subsidies in the form of a free electricity quota given to poverty-stricken residents, Xinhua reported.

Progressive residential power tariffs were introduced in the US, Japan, Egypt, as well as in Hong Kong and Taiwan following the oil crisis in the 1970s. The system proved effective in curbing excessive use while ensuring the basic demands for most people were met, the commission said.

At present, Shanghai's residential power price is 0.617 yuan (about 10 US cents) per kwh, and half that figure at night.



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