At an executive meeting of the State Council, China's Cabinet, chaired by Premier Li Keqiang on Friday, it was stressed that the price mechanism for coal-fueled electricity needs to be improved so it can better reflect market needs.

 

The meeting has timely responded to the public's concerns about power shortages after some cities limited or even cut off residential electricity supplies at times.

 

There were two main reasons for this: First, there has been a shortage of coal for electricity generation, which pushed up the price. Second, some local governments limited the electricity supply in order to meet their carbon emissions reduction targets.

 

To address the first problem, the meeting urged coal enterprises to resume production, prioritize the transportation of coal and allowed coal-fired power plants to delay paying their taxes.

 

But, more importantly, it has adjusted the electricity pricing mechanism by allowing the price to float within 20 percent rather than 10-15 percent. That has hit the nail on the head, because how to ensure residential use of electricity at acceptable prices while allowing coal-fired power plant operators to make money has long been a challenge. The electricity generating enterprises have long been required to keep their prices stable, but the coal used by power plants was purchased at market prices. When the price of coal rises, the coal electricity enterprises lose money for every kilowatt-hour of electricity they generate.

 

Also, while the nation is accelerating its carbon-cutting efforts by adjusting its industrial structure and shifting to greener development, some local governments have been going about it the wrong way, by allowing high carbon consumption in the first half of the year, then applying a sudden brake in the second half by limiting residential electricity use when they find it difficult to otherwise achieve their carbon-cutting objectives for the year. That's a big mistake that must be corrected. By highlighting the phenomenon and vowing to correct the wrong, the meeting offers hope that this issue will be resolved.

 

Winter is coming and the temperatures are dropping. How to keep their homes warm is of key importance to residents. It is the responsibility of local governments to ensure the supply of electricity and to cut carbon emission, which is a challenging task but one they must do well.

 

Source: China Daily