China is rolling out a tiered electricity pricing system for residential users. The new pricing structure consists of three tiers for electricity rates. Customers using more power will pay higher rates per kilowatt-hour than those who use less electricity, with the move aiming to ease the country’s chronic shortage of power.
The lowest tier of users won’t face an increase in prices, which applies to 80% of households. But prices will be raised by 0.05 yuan per kilowatt hour for the second tier and another 0.30 yuan for the third tier. Experts say the move not only helps promote energy conservation, but also the redistribution of social wealth.
Provinces and municipalities have the right to determine their own rate level based on local conditions, with a first tier threshold that ranges from 60 to 260 kilowatt hours per month. Public hearings have been conducted across the country. But opinions are divided.
Beijing resident said "I’m supportive of this move. It helps reduce power consumption and conserves energy."
Beijing resident said "Three generations of my family live together. For us, we will definitely pay higher fees. I think the charge should be based on per person consumption threshold for families instead of total household usage."
Nie Jia, Beijing, said, "China currently charges uniform rates for power usage. Reform plan was put on table several years ago but was postponed due to inflationary pressures. Experts say the reform is essential and marks a major step forward for China to move from a planned to a market-based pricing. "
The system also offers preferential treatment to low-income households, which will be allowed to use 10-15 kilowatt hours free of charge. Residential power prices have not changed since 2008. They ranged from 0.36 to 0.62 yuan/kWh in the 31 provinces, municipalities and autonomous regions in 2010.