China body calls for more responsive power prices -report

BEIJING, Jan 27 (Reuters) - China should reintroduce a power pricing formula that has been sidelined for years to make electricity fees more reflective of coal costs, Xinhua cited a senior industry official as saying.

Coal prices had risen by about 40 yuan ($5.90) per tonne since the start of the year as power demand rose on the back of a reviving economy and a cold winter, China Electricity Council general secretary Wang Zhixuan told a work meeting, Xinhua reported on Wednesday.

'The coal-power pricing mechanism should be relaunched in a timely manner to ease pressures on power plants,' Wang was quoted as saying.

Under a scheme put in place in 2004, the government can adjust power prices if coal costs rise 5 percent in six months. But the rules have been loosely followed since 2005 and largely ignored since mid-2007 on concern that too many increases coming too quickly might hinder economic growth and lead to social unrest.

Wang said the threshold for price rises was too high and needed to be lowered, according to Xinhua. He suggested that measures should be taken to curb thermal coal price increases to ensure stable power tariffs.

Coal prices halted a four-month advance this week as improving weather conditions eased coal and power shortages.

Prices for coal with a calorific value of 5,800 kcal/kg (NAR) were unchanged from a week earlier at 840-850 yuan per tonne on Tuesday, according to Qinhuangdao Seaborne Coal Market (www.cqcoal.com).

China raised power prices for non-residential users by about 5.4 percent in November, the first increase since July 2008, to compensate grid companies that lost out because of a government cap on prices.

Coal-fired power plants, which produce nearly 80 percent of China's electricity, suffered hefty losses last year during the global commodities boom, despite two power price increases.

China's five major power generating groups have been in a tussle with coal miners since late last year in their annual supply talks.

These power companies include parents of China Power International, Datang International Power Generation Co Ltd, Huadian Power, Huaneng Power International and GD Power Development Co Ltd.

((Editing by Chris Lewis))

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