Zhang Muhong, an official with the State Grid Corporation, said that they are optimistic about the power supply in the second half of the year, according to a China Economic Times report. Although demand is still expected to rise 12 percent to 15 percent year-on-year, the central government's macro-control measures should have a strong influence on power consumption in restricted industries.

Zhang added that electricity price hikes also could curb demand to some extent, although demand cannot be lowered sharply in near term.

Electricity prices have been adjusted several times since the beginning of this year. In early 2004, the average price increased 0.008 yuan per kilowatt-hour nationwide and in mid-June it went up another 0.022 yuan.

In addition, the National Development and Reform Commission decreed that the price of electricity for the electrolytic aluminum, ferroalloy, calcium carbide, caustic soda, cement and steel industries -- all heavy power-consumers -- would have an additional 0.02 yuan to 0.05 yuan tacked on. Not only does this step curb demand, but it also has a strong restraining effect on projects that breach national industrial policies.

Persistent high temperatures this summer are the driving force for power consumption. Although weather reports show that the temperatures in most regions are near or only slightly higher than last year's, the number of hot and humid days has definitely increased.

On the plus side from Mother Nature, this year's relatively heavy rainfall can actually help with power generation in such regions as northwest, south and central China.

Unfortunately, installed generation capacity in the first half reached only 31 percent of that planned for the year, too little and too late to help with the summer peak. Coal supply for power generation -- a longstanding issue owing to price controls -- also continues to be a problem.

(China.org.cn by Tang Fuchun August 24, 2004)