China Electricity Council (CEC), an organization representing the country's power industry, has recently submitted a proposal to the National Development and Reform Commission (NDRC) to raise electricity prices next year.

The proposal said major coal enterprises in coal-rich provinces have issued a notice that new contracts for electricity coal in 2008 will include a price rise of more than 30 yuan (US$4.05) a ton. This would result in a sharp increase in electricity costs.

In the proposal, the CEC suggested NDRC peg electricity prices to coal prices.

Observers noted it was difficult to predict whether NDRC would adopt this proposal, especially with China's currently soaring consumer price index (CPI) growth.

The proposal also suggested administrative regulations on coal prices, saying that if the prices continued to rise, most coal-powered electricity plants would suffer heavy loss.

In the first nine months, statistics showed that coal price rose 25 yuan a ton from last year to 304 yuan a ton, an 8.9 percent increase over last year.

NDRC, a macroeconomic agency under the State Council, is the key department in charge of price regulation.