Electricity price increases may be approved in the near future or not limited to local
Electric power enterprises are facing the most severe operating pressure since 2008, with the emergence of power shortage in some areas, and some provinces and cities may face the test of power restriction again. In the context of easing inflationary pressures, the need for and possibility of a recent nationwide increase in electricity prices is further increasing. Meanwhile, new emissions standards for coal-fired power plants, which come into force on January 1, have added urgency to the rise in electricity prices.
Power companies are facing the dilemma of losing money in generating electricity. From the power enterprises can be seen in the third quarter, the first three quarters of the power sector profits fell more than 26%. The financial pressure on enterprises is huge. Some power plants have a debt ratio approaching 150%.
As a result, the regulator recently warned that six central provinces could face the worst power shortages on record this winter and next spring, with some provinces and cities again facing blackouts. It has entered the peak season for power supply and heating, driving up the seasonal increase in thermal coal prices, which will make life more difficult for power companies.
In addition, the emission standards for air pollutants from coal-fired power plants will take effect on January 1 next year. According to preliminary estimates by the China Power Union, the increase in environmental standards will increase the operating cost of coal-fired power plants by 90 billion to 110 billion yuan per year. Without the introduction of denitrification price, it is difficult for electric power enterprises to bear such a large operating cost even though they are already in serious loss.
Based on these factors, the need to ensure a safe supply of electricity in the short term increases. If the electricity price is not raised in a timely manner, the power enterprises, which have suffered serious losses, will be even less motivated to generate electricity, and the impact of power shortage on the macro economy is obvious.
The relevant departments have recently reported the electricity price adjustment scheme. Given that the downward trend in inflation is well established, it is highly likely that the tariff adjustment will be approved in the near future.
