Rising coal costs push power firms further into red

A substantial increase in the price of coal is causing China’s major power generation groups to bleed money, state media reported. Coal-fired power plants operated by China’s five largest power generation groups – China Huaneng Group (HNP.NYSE, 600011.SH, 0902.HK), China Datang Corp (1798.HK), China Guodian Corp (00096.SH), China Huadian Corp (600027.SH, 1071.HK) and China Power Investment Corp – lost US$1.88 billion in the first five months of this year, US$1.21 billion more than in the same period in 2010. In May alone, they lost US$261.4 million. While the National Development and Reform Commission raised the cost of on-grid electricity twice this spring, the price of thermal coal also rose nearly 10% to around US$130 per ton between early April and late June, more than offsetting the increase in the price of power.