Recently, Shanxi's and Inner Mongolia's listed power companies changed their prices for electricity transmitted from their new power plants to Beijing-Tianjin-Tangshan region to respectively 0.298 yuan / kwh and 0.297 yuan / kwh (neither including values added by desulfurization), based on the directives from the National Development and Reform Commission (NDRC). Some analysts in the power industry viewed this as another obvious sign that the government will follow the power-coal peg policy to change the electricity prices nationwide for the third time.

A veteran researcher in the power industry noted that these price adjustments did not result from the power-coal price peg policy but were mainly caused by the changes in power generation costs. The changes were also related to strong urges from Shanxi and Inner Mongolia to enact the price peg policy in order to change electricity prices in certain areas. Therefore, it is reasonable to say that these changes also reflect a nationwide power price adjustment trend.

A report by Shanghai Shenyin Wanguo Research & Consulting Co., Ltd. says that the government is very likely to carry out the power-coal peg policy next year. Currently the government's hesitation to adjust general electricity prices nationwide can be attributed to the fact that CPI is very high this year and the coal prices fell down from their peak during the February-May period. If CPI is not so high next year, the policy is very likely to be carried out and the power companies may see pressures from fuel price surges ease.

For more details, please read the full story in Chinese. (http://www.cs.com.cn/ssgs/04/200709/t20070924_1198224.htm)

(China.org.cn September 24, 2007)