China, the world’s biggest energy consumer, raised electricity prices for the first time in six months and said it will cap spot coal prices in an effort to reduce power shortage in the coming peak seasons, Bloomberg reported. Retail power prices rose by US0.47 cents a kilowatt-hour while wholesale rates surged to US0.41 cents a kilowatt-hour. Price gains for contract thermal coal in 2012 will be limited to less than 5%, according to the National Development and Reform Commission (NDRC). China Electricity Council said on October 27 that the country faces a shortage of 40 gigawatts in the winter and spring. “The measures are aimed at easing cost pressure on utilities and making them generate more electricity. But it will only work in the short term” said Dave Dai, regional head at Daiwa Capital Markets. Spot coal prices on thermal coal with an energy value of 5,500 kilocalories per kilogram at northern Chinese ports wiil be capped at US$126 a metric ton effective on January 1. NDRC also said residential power prices will be unchanged for now and China will double surcharges on power users to 0.13 cent a kilowatt hour to subsidize renewable-energy projects.