China looks at hiking industrial power price to ease supply crunch

The Chinese government is considering raising power prices for industrial consumers to help ease a growing supply crunch.

The rate hikes for factories could come in the form of higher flat fees, or in rates that are linked to the price of coal, according to people familiar with the details of the plan. 

The government has also discussed raising rates for residential users if the industrial increases aren’t enough to solve the crisis, said the people, who asked not to be identified because the information isn’t public. The plans may still be changed and are subject to final approval, the people said.

The discussions are coming as the world’s second-biggest economy faces power shortages that are threatening to slow growth and further strain global supply chains. 

Record-high coal prices mean many power generators are losing money at current electricity rates, keeping some from boosting generation to meet demand. In its first high-profile public response to the power crunch that’s spread to at least 20 regions in China, the National Development and Reform Commission on Wednesday said it will let power prices reasonably reflect changes in demand, supply and costs.