THE government will cut on-grid wholesale prices of thermal electricity, probably from the second quarter of the year, as coal prices tumble, domestic media said Friday.

    The second price cut since September could help reinforce the downward trend in coal prices, piling more pressure on the country’s coal mining sector, where over 70 percent of mines are suffering losses.

    The National Development and Reform Commission (NDRC) is seen cutting benchmark on-grid prices by an average of 0.015 yuan (US$0.0024) per kilowatt hour, the Xinhua News Agency-run Economic Information Daily said.

    The move will come after a sustained collapse in coal prices, brought about by a huge supply glut of the thermal fuel, with benchmark Qinghuangdao thermal coal last quoted at around 475 yuan per ton March 23.

    On-grid tariffs are the rates power generators charge grid companies, and prices vary from province to province. Coal now fires roughly 75 percent of China’s power generation, the world’s largest.

    The upcoming cut would also affect retail electricity prices and help energy-intensive manufacturing, such as cement and electroplated aluminum production, the paper said.

    A price change last September cut on-grid prices by 0.0093 yuan.

    Policy-setters are finalizing an ambitious power sector deregulation plan that allows power generating firms to compete in spot markets supplies into grid operators, and also frees up the retail power markets to boost private investments.

    (SD-Agencies)