China to charge more for high-end electricity use

The National Development and Reform Commission (NDRC) announced today that China will initiate the system on trial basis to charge residents more for electricity if their usage exceeds a certain level.

The trial, known as tier-based electricity pricing mechanism, will take effect July 1, NDRC, China's top economic planning body said in a statement.

The plan may affect about 20 per cent of the population without impacting 80 per cent of the population because their monthly usage was too low.

However, the electricity price for the rest who use more power will be raised by as much as around USD 0.05 per kilowatt-hour, Xinhua reported.

Lin Boqiang, a Xiamen University professor, estimated the tier-based electricity pricing will help power companies gain up to about USD 95 million in extra revenue each year without taking into account the subsidies in the form of a free electricity quota given to poverty-stricken residents.

China, which in the past had access to abundant power began experiencing shortages, specially in summer after forcing the closure of coal-fired power generating units operating with very old technology causing heavy damage to the environment.