Rising coal prices threaten China's power industry

China’s coal industry could enter the red this year if coal prices are not controlled and electricity prices are not allowed to rise, reported state media. The China  Electricity Council (CEC) issued a report stating that China should readdress the issue of a coal electricity pricing linkage mechanism. A mechanism to adjust electricity prices if coal prices rise by more than 5% over a six-month period was implemented at the end of 2004, but so far the government has only acted to apply this mechanism twice. "This year will be tough for coal-fired power plants, although it is still hard to estimate by how much coal prices will go up this year," said Xue Jing, director of the statistics and information department under the CEC.