CHINA may cut on-grid wholesale prices of thermal electricity for the second time this year, domestic media said Friday, a move which could reinforce the downward trend in coal prices and hit struggling coal mines.

    More than 70 percent of coal mines have suffered losses in the first half of the year.

    The country’s State Council has proposed cutting benchmark on-grid prices, perhaps by an average of 0.03 yuan per kilowatt hour, from November at the earliest, the Economic Information Daily said.

    The move would come after a sustained collapse in coal prices, brought about by a huge supply glut of the fossil fuel, with benchmark Qinhuangdao thermal coal last quoted at around 380 yuan per ton, down 27 percent so far this year.

    On-grid tariffs are the rates power generators charge grid companies and prices vary from province to province. Thermal power, including coal, accounts for almost 70 percent of China’s power generation.

    A cut would affect electricity companies, reducing their profits by 126 billion yuan (US$19.85 billion), but would have limited impact on the falling coal prices, the newspaper quoted an analyst as saying.

    A price change in April cut on-grid prices for coal power by 0.02 yuan.(SD-Agencies)