China will raise electricity prices for industrial users in 15 provinces starting June 1, the first increase in more than a year, an official at the National Development and Reform Commission said. Prices paid by residential users will remain unchanged, the official said by telephone from Beijing today, declining to be identified because the economic planning agency hasn’t released a statement on the decision yet. Li Puming, a spokesman at the NDRC, declined to comment when contacted by Bloomberg News. China is battling with an electricity supply shortfall that may reach as much as 40 gigawatts this summer, surpassing the shortage in 2004, the country’s worst, according to State Grid Corp. of China. The price increase would be the first since November 2009 and may spur power plants to increase utilization rates after rising coal costs and government caps on electricity tariffs forced some utilities to curtail operations or even shut. “This will help power producers and give them more incentive to maximize production amid the power shortage,” Zhang Long, a utility analyst at Essence Securities Ltd., said by telephone from Shanghai. At least 10 provincial grids serving municipalities including Beijing, Tianjin, Shanghai and manufacturing bases in the provinces of Hebei, Jiangsu and Zhejiang will be hit by power shortages, the official Xinhua News Agency said on May 23, citing Shuai Junqing, an executive vice president at State Grid. China increased on-grid power tariffs, or prices paid to power producers by grid operators, last month to help electricity producers facing losses. With retail prices raised, there is room for further on-grid tariff increases, Zhang said. Industrial Users China raised electricity prices for industrial users in some regions by about 0.02 yuan (0.3 cent) per kilowatt-hour, Xinhua said today, citing the NDRC. Power prices for industrial users are currently at 0.47 yuan a kilowatt-hour on average, according to government data. Benchmark power-station coal prices at Qinhuangdao port rose to between 830 and 845 yuan a metric ton as of today compared with a week earlier, according to the China Coal Transport and Distribution Association. That’s the highest since October 2008. China’s power-generating capacity was 960 gigawatts as of last year, with coal and oil-fired power plants accounting for 73 percent of it and hydropower dams 22 percent, according to the National Energy Administration in January. The country’s five largest generators are China Huaneng Group Corp., China Datang Corp., China Power Investment Corp., China Guodian Corp. and China Huadian Corp. --Winnie Zhu. Editors: Ryan Woo, Alexander Kwiatkowski. To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net.

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