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BEIJING, June 22 (Reuters) - China’s state planner will reduce surcharges paid by coal-fired power producers, paving the way for the first increases in wholesale power prices since 2011, according to a document sent to regional officials and power producers and seen by Reuters.
The change will take effect from July 1, said the document sent by the National Development and Reform Commission (NDRC), and will help utilities manage rising coal prices.
“Power generators have been complaining about losses since last year as coal prices increase, so a tariff decrease is much expected,” said Li Rong, power analyst with consultancy SIA Energy.
Thermal power companies pay surcharges to provincial governments to cover environmental protection and other programs. According to the document, local authorites, which onsell the power to the national grid, will be able to raise power prices, offsetting the lower surcharge revenues.
China last raised on-grid thermal power prices in 2011. Tariffs have since fallen due to years of weakening coal prices, which began to turn around in April last year.
In Ningxia, a region suffering from surging coal prices and a glut of overcapacity, the government plans to raise prices by about 0.25 Chinese cents per kilowatt hour (kWh) from the current regional benchmark rate of 25.95 cents per kWh, equivalent to 1 percent hike, an official with the regional government said.
Top power groups have been lobbying the Ningxia government to curb soaring coal prices.
The NDRC did not immediately respond to a faxed request for comment.
The reduction of one surcharge by 25 percent and the elimination of another comes as power companies report losses as coal prices hit record highs.
Thermal coal futures prices rose more than 40 percent this year to a record high around 580 yuan ($84.90) per tonne on June 20. ($1 = 6.8314 Chinese yuan renminbi) (Reporting by Meng Meng and Chen Aizhu; Editing by Tony Munroe and Richard Pullin)