Power tariff reform is a big issue, and a pan-China rollout that can take care of the vested interests of multiple parties won’t be possible any time soon. Yet power-rich Yunnan province is taking the lead to pilot a new system, paving the ground for a more market-oriented power market.
Blessed with an abundance of hydroelectricity (which accounts for about 70 percent of its supply), the southwestern province has set a benchmark power transmission price as part of an experimental direct power purchase scheme, according to a China Securities Journal report.
The new arrangement will allow users like factories to buy electricity they need directly from power plants, with tariff subject to negotiation, or market forces, the Journal notes.
Instead of profiting from the difference between what is paid to power plants and the tariff paid by consumers, the grid will now receive a fixed transmission fee.
Although there is a power surplus in Yunnan, many industrial users still pay high tariffs. Under the new system, power users are expected to save money.
The change could be a game changer for heavy power consumers like the aluminum industry, where the power bill can cost half the revenue.
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