context: The ‘2018 government work report’ revealed the first ever quantitative goal to reduce the price of electricity for industrial and commercial use (note: this is one category of electricity pricing, alongside agricultural electricity use, large industrial production use, etc.), which is in line with a campaign to unburden the real economy and rekindle the economic growth that started in 2012.
The '2018 government work report' announced that grid transmission fees will be reduced and electricity prices for industrial and commercial use will be lowered by 10 percent on average in 2018. The price for industrial and commercial electricity is currently around C¥0.8/KWh, so a 10 percent cut means reducing it by C¥0.08/KWh, says Cao Peixi 曹培玺 Chinese People's Political Consultative Conference (CPPCC) National Committee representative and China Huaneng Group chairman. Total electricity expenses nationwide are expected to be cut by C¥80 bn this year, estimates Shu Yinbiao 舒印彪 CPPCC National Committee representative and State Grid chairman.
Power plants and energy grids are expected to be the major contributors in fulfilling the reduction targets. Shu estimates that State Grid will take on around 80 percent of the responsibility in the campaign, while Cao points out that if electricity price drops by C¥0.01/KWh, power plants will lose over C¥10 bn.
The current price of electricity for industrial and commercial use is substantially higher than that paid by large industrial producers; many members of CPPCC and National People’s Congress (NPC) believe the price cut will be effective in reducing expenses for businesses. The announcement was applauded as a boon to the real economy by Cao Zhi’an 曹志安 CPPCC National Committee representative and China Southern Power Grid general manager, who is confident that even if energy consumption increases as price drops, it will not lead to power shortages.