● Southern Daily News Reporter Peng Guohua - Price reforms for resource-related products such as water, electricity, and gas have been in a state of "thunder without rain," but in 2012, this pattern is set to change. A relevant official from the National Development and Reform Commission (NDRC) stated that energy resource price reforms will be "introduced at an opportune time." Recently, there have been consecutive price hikes for water, electricity, and gas across various regions. Guangzhou has already held a public hearing on a water price adjustment plan. Starting yesterday, Tianjin decided to increase the residential tap water price by 0.50 yuan per cubic meter.
Industry experts expressed that while the reform of living resource product prices certainly bears the pressure of energy conservation and emissions reduction, it also paves the way for major reforms in coal and oil energy. To ensure that prices do not rise too quickly, the reform should still grasp the "degree" of price adjustments.
Preliminary reforms in water, electricity, and gas prices are paving the way for larger energy reforms in coal and oil. Recently, Deputy Director of the NDRC's Price Department, Zhou Wangjun, told the media in an interview that energy resource price reforms would be introduced based on economic conditions this year. These include reforms in electricity prices, refined oil, natural gas, agricultural water prices, and environmental protection fees.
Regarding energy resource price reforms, Lin Boqiang, director of Xiamen University's China Energy Economics Research Center, told our newspaper that the upcoming reforms in electricity, gas, and water were all "small-scale energy resource reforms," as their proportion in the domestic energy structure was relatively low, approximately around 4%-5%.
According to coal industry data statistics, last year’s domestic coal production reached 3.52 billion tons, accounting for about 78.6% of total primary energy production. The total coal consumption was 3.57 billion tons, making up about 72.8% of total primary energy consumption. Lin Boqiang said that this reform was "both a result of energy-saving and emission-reduction pressures and an experimental reform, which could accumulate experience for the 'major reform' of coal, which accounts for more than 70% of energy."
For tiered electricity pricing, in fact, as early as October 2010, the "Reform Plan for Tiered Electricity Prices (Draft for Public Comments)" had already been released. Since its announcement, people have been eagerly anticipating how electricity prices would be calculated. More than a year later, the tiered electricity pricing system was finally "set" to begin implementation this year.
Our reporter learned that relevant departments in Guangdong Province are formulating specific plans for tiered electricity prices according to the NDRC's guidance opinions, which will then be submitted for approval after a price hearing. It is understood that after the implementation of the tiered electricity pricing system, the electricity prices for 80% of resident users in Guangdong will remain unchanged. The electricity burden for urban and rural "low-income households" and rural "five-guarantee households" may even decrease, while the electricity costs for "heavy electricity consumers" families will increase.
Zhou Wangjun expressed that during the planned economy era, a long-term "low-price, low-income, low-consumption" model was practiced, and the prices of basic products such as resources and energy were relatively low. Currently, the focus of price reform is to straighten out price relationships, fully leveraging the role of market mechanisms in guiding resource allocation, and cannot simply be equated with "price increases."
Price hikes are underway in various regions; the tiered electricity pricing system is currently being prepared. Regarding energy resource prices, especially reforms in water, electricity, and gas, people generally care whether "price reforms" will evolve into "price increases," and what the extent of these price increases will be.
Lin Boqiang stated that after reforms in electricity, gas, and water, such as implementing tiered electricity and water pricing, large users of water and electricity will bear some pressure from price increases. However, due to their relatively low weight in the CPI, the impact on the CPI will not be significant.
In December 2011, the "Guiding Opinions on Pilot Implementation of Tiered Electricity Prices for Residential Living" (referred to as "Guidance Opinions") was issued. The guidance clearly states that the proposed tiered electricity prices will be divided into three tiers: the first tier covers the electricity consumption of the first 80% of users, with no adjustments made; the second tier covers users between the 80% to 95%, with appropriate price increases, where each kilowatt-hour must be raised by no less than 5 cents; the third tier includes users exceeding the second tier, with each kilowatt-hour increased by no less than 30 cents.
An industry insider calculated for the reporter that if the first tier, second tier, and third tier electricity consumption were 150 kWh, 150-270 kWh, and over 270 kWh respectively, the second tier price increase would be 0.05 yuan, and the third tier price increase would be 0.30 yuan. If household electricity consumption is less than 150 kWh, the electricity bill will not be adjusted; if the electricity consumption is 270 kWh, the monthly electricity bill will increase by 6 yuan; if the electricity consumption is 350 kWh, the electricity bill will increase by 30 yuan.
The insider indicated that the tiered electricity pricing for residents will alter the single form of electricity pricing, with electricity prices increasing progressively in steps as electricity consumption increases. In other words, the more you consume, the higher the price becomes.
Regarding water price reforms, Guangzhou has already held a public hearing on the water price adjustment plan, where the first proposal suggests a minimum increase of 0.7 yuan per ton of water, and the second proposal suggests an increase of 0.6 yuan. Currently, hearing representatives agree with the price hike, but the method of the increase has yet to be determined. Previously, the residential water price in Changsha City rose from 1.88 yuan per cubic meter to 2.58 yuan, and Wuhan City has begun preparations to hold a water price adjustment hearing.
Besides adjustments in water and electricity prices, natural gas prices are also starting to move. Starting March 1st this year, cities such as Hefei and Ma’anshan in Anhui Province adjusted residential natural gas prices, increasing by 0.20 to 0.31 yuan per cubic meter.
Industry experts expressed that the country has already decided to fully advance price reforms for resource-related products. However, during the reform process, it is essential to control the "degree" well. If the price increase for water, electricity, and gas is too high, it will mean a loss of interest space for downstream producers and consumers, and it will also lead to a comprehensive rise in prices.
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