China provinces hike power prices as coal market surge prompts surcharge cut

At least six provinces in China have hiked wholesale coal-fired power prices this month, the first electricity tariff increases since 2011,
to offset a drop in revenue from cuts to surcharges paid by producers due to this year’s surging coal market.

The increases in benchmark power grid prices come after thegovernment said it would cut surcharges paid by coal-fired power
producers to provincial governments from July 1 to help the electricitygenerators cope with soaring coal prices.

Chongqing, Shandong, Shaanxi, Jiangsu, Henan and Hebei have all announced price hikes on their local government websites since the start
of July.

Thermal power companies pay the surcharges to help cover environmental protection and other programmes. Local authorities, which
on-sell the power to the national grid, raised their power prices to offset the lower surcharge revenues.

China last raised on-grid thermal power prices in 2011. Tariffs have since fallen due to years of weakening coal prices, which began to rise
in April last year.

The reduction of one surcharge by 25 percent and the elimination of another comes as power companies report losses due to record-high coal
prices.

Thermal coal futures <CZCcv1> have soared almost 50 percent this year, hitting a record high of around 606 yuan($89.70) per tonne on
Monday.

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