The NDRC says residential electricity prices will not be raised this time. But starting next year, charges will be on a progressive basis.

The new pricing mechanism for residential users means the more electricity they use, the higher the bill. The aim is to encourage energy conservation.

Residential users pay more than industrial users. In foreign countries, the former usually pay 1-and-a-half to 2 times more. But China has kept prices low for low-income families. In 2008, it cost 0.5 yuan a kilowatt-hour on average, compared to 0.7 to 0.8 yuan for commercial and secondary industry use.

Expert say charging electricity on a progressive basis can optimize the consumption structure. And it would not increase pressure on low-income families.

Liu Zhenqiu, Deputy Director of NDRC Pricing Department said "Our preliminary idea is to divide electricity prices into three stages. The first stage is basic electricity consumption. We will give a guiding price, and local governments fix their actual price. The second stage is likely to cover twice the electricity use of the first stage. And above that will be the third stage, which is luxury electricity use."

The reform will be carried out in line with actual situations in different areas, following discussions and research.

Residential electricity accounted for 12.8 percent of the country's total power consumption in the first half. Experts say electricity only accounted for a small share of household expenses. Even after the future rise in residential rates, it will not add pressure to a CPI hike.

Comments