A graduated tariff system is will be adopted to raise Shanghai electricity prices by an average of 4 percent but leave most families unaffected. [File photo]

A graduated tariff system will raise Shanghai electricity prices by an average of 4 percent but leave most families unaffected, according to plans released yesterday.

Increased charges will kick in once a household uses more than 260 kilowatt-hours a month, the average consumption of 80 percent of the city's 7.72 million households last year. This figure will be the limit for the "basic needs" category in the progressive tariff system and is the highest on China's mainland due to Shanghai's level of economic development.

The system is part of the national government's pricing reforms aimed at conserving energy and protecting the environment.

The National Development and Reform Commission requires all provinces and municipalities to implement such a system within the first six months of this year but said any local plan should make sure tariffs for 80 percent of households remain unchanged.

The price of electricity in the basic needs category will stay the same while that for the portion exceeding the figure will increase by 0.05 yuan per kwh, and rise by 0.3 yuan for the portion beyond 400 kwh, the Shanghai Development and Reform Commission said.

At present, the city's residential power price is 0.617 yuan (about 10 US cents) per kwh, and half that at night.

On average, the local plan will translate into an average rise of 0.024 yuan per kwh and an extra 4.15 yuan per month per household, the city commission said.

Extra money raised by the new system will be used to compensate power producers for rising fuel costs, upgrade power plants to make them more environment-friendly, and replace residential power meters. They cannot be used for the benefit of power company employees, the commission said.

To mitigate seasonal factors, the commission is proposing to raise the basic needs figure to 350 kwh per month in July and August and in December and January when people need air-conditioning to keep cool or to stay warm. For the rest of the year it would be reduced to 210 kwh.

A third method will use one year as a calculation period: a household pays what it currently pays for power until consumption rises to 3,120 kwh, and then pays higher prices during the rest of the year.

But this option could cause problems in the lease market. For example, a tenant may have pricier power if he rents an apartment in the middle of the year.

Shanghai will also grant low-income families 15 kwh of electricity free every month.

The graduated system will not apply to households who share meters with others, mainly people living in old residential complexes, authorities said.

The proposals are subject to a public hearing on May 11.

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