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Authorities approve heating price increases for winter

By Wang Xu (China Daily)
Updated: 2008-09-13 11:27

The country's top economic planner has allowed local authorities to raise heating prices for the upcoming winter, on the condition that public hearings are held to discuss the changes.

The price adjustments should take into account factors such as the increase in production cost, inflation and the income level of residents, the National Development and Reform Commission (NDRC) said on Friday in a circular posted on its website.

Local governments are also required to increase subsidies for heating enterprises, while the provincial and central governments will allocate more funds for lower-level governments that cannot afford to do so, the circular stated. Heating enterprises will also continue to enjoy the tax increases.

Similarly, the price adjustments should include provisions for low-income families to guarantee heating for the public, the NDRC said.

The government sets heating prices for residential use in the country, while coal prices, which accounts for the lion's share of production cost, fluctuate according to market demand.

Over the past year, coal prices have more than doubled in some regions, taking a toll on heating and thermoelectric enterprises that have reportedly been struggling to stay afloat.

The State Electricity Regulatory Commission has submitted a report to the central government, suggesting that heating fees be raised to ease mounting costs.

The NDRC also said the thermoelectric industry has been suffering losses in the past year.

Thermoelectric enterprises account for 18 percent of the country's electricity generation and 81.2 percent of steam used to provide heat, NDRC figures showed.

The central government has been rolling out measures to curb price hikes for public utilities since the beginning of the year, to rein in inflation.

China's consumer inflation has been rising since last May and topped 8.5 percent this April, the highest level in the past 12 years, official figures showed.

Food prices rose the most over the period.

Besides measures to curb inflation, the central government has also raised subsidies for low-income families to help them cope with the rising cost of daily necessities.

Still, the NDRC raised electricity prices twice since June this year, increasing power tariffs by about 10 percent. The move came as previous price controls forced a number of electricity enterprises to trim production, leading to power shortages in some regions.