NDRC Urges End of Preferential Power Tariffs for Energy-Intensive Industries

The National Development and Reform Commission (NDRC), China's state economic planner, is urging regional governments to cancel preferential power tariffs on local energy-intensive industries, the commission announced on May 14.

Some regional governments began imposing preferential power tariffs on local industrial firms in the hopes of diminishing some of the negative impacts of the global financial crisis which struck China's economy in 2008.

While the power tariff policies have helped reduce operational costs of some industrial firms, they also encouraged these firms to consume more energy, said the NDRC.

In order to achieve the goal of cutting carbon emissions by the end of 2010, the preferential power tariffs should be eliminated, the NDRC said.

Meanwhile, the NDRC will begin charging a higher rate for power consumption in the electrolytic aluminum, iron alloy, calcium carbide, sodium hudroxide, cement, steel, yellow phosphorus and zinc smelting industries. These industries will pay an extra power tariff ranging between RMB 0.1 ($0.015) to RMB 0.3 ($0.04) for every kWh of electricity they consume effective June 1.

Such charges, which have been levied since June 2004, currently range between RMB 0.05 ($0.007) to RMB 0.2 ($0.03) per kWh.

The NDRC also said regional governments are authorized to further hike power tariff charges on noncompetitive local industrial firms from the eight industries listed above.

The commission said it would additionally punish industrial firms that fail to abide by a set energy consumption quota.