New coal contracts may cause electricity price hike

Coal prices for 2008 were expected to increase an average of 10% as negotiations between coal suppliers and power companies neared their conclusion, Shanghai Securities News reported (in Chinese). The contract price for coal will go up by US$4-10 per ton, depending on the grade of coal. The increase could trigger an automatic coal-power tariff system put in place in 2005 which allows power utilities to adjust electricity prices to cover costs when the price of coal increases by over 5% over half a year. However, the National Development and Reform Commission, which would have to approve any such increase, has not commented on the matter.