Transparent pricing mechanism

The government's recent decision to charge non-residential consumers an additional 5.7 percent for electricity signifies a major step toward reforming its long-standing pricing mechanisms involving resource products.

The National Development and Reform Commission (NDRC), the country's top economic planner, announced last week that it would raise the electricity price for industrial and commercial users to 0.533 yuan (3.4 US cents) per kilowatt-hour from 0.494 yuan. Residential electricity rates remain the same for the time being, but a "ladder pricing" model is expected to be adopted in the future after an in-depth investigation and consultations, according to the NDRC.

This is the first price hike since last July when electricity prices for non-residential consumption were raised 5 percent, and comes amid the severe gas shortage that some of China's southern provinces and cities have suffered in the face of freezing temperatures. It may be part of the country's long-term efforts to revise its energy pricing mechanism to reflect costs and promote energy conservation as the world's fastest-growing major economy struggles to meet soaring energy demand.