In an attempt to reduce outages in coming months and ease the pressure on the country's power plants, which have been squeezed between surging coal prices and market demand, the National Development and Reform Commission (NDRC) announced on Wednesday that electricity prices for nonresidential users and the on-grid tariff paid to power producers will be raised starting from Thursday.

Residential users will not be affected by the latest price hikes. However, the commission said it plans to implement a three-tier residential pricing mechanism that will make those who consume more pay more.

The new three-tier mechanism means the 5 percent of residential users who consume the most electricity will be charged the highest price, while for 80 percent of residential users the price will remain the same.

But what is particularly noteworthy about the proposal is that poorest consumers in both rural and urban areas will enjoy 10 to 15 kWh of free electricity each month.

The proposed pricing mechanism is obviously an effective way to ultimately reduce the impact a rise in power prices will have on the life of most residents while reducing the country's demand for energy.

China's power consumption rose 11.35 percent in October from one year earlier to reach 379.7 billion kWh in October, the National Energy Administration said earlier this month.

In the previous plan the NDRC published more than a year ago, only 70 percent of residents would pay the base price of the first tier, and even the base price would be raised. There was also no free electricity for impoverished residents.

The 5 percent of residential users who have the highest demand for electricity account for 24 percent of total residential electricity consumption.

Hopefully the higher price for the 20 percent of households with the largest demand will encourage these users to reduce their energy use.

This makes a lot of sense to the country's efforts to address climate change and protect the environment.

Detailed adjustments for residential power prices for the heaviest residential users will be determined by individual provinces and will be decided at local public hearings, the commission said.

Hopefully, local governments will make good practical plans to ensure that the new pricing mechanism means those wealthy users who consume more power because of their luxurious lifestyles will have to pay for their larger carbon footprint.

(China Daily 12/02/2011 page8)