At the "2012 Energy Summit and the Fourth High-level Forum on Chinese Energy Enterprises," Chen Zhongfa, Director of the Policy and Legal Affairs Department at China Huadian Corporation, highlighted that while the long-standing tension between coal and electricity has eased, the top five thermal power plants are still facing significant financial challenges. As of the end of September, their losses reached 47%.
Chen explained that this year, the National Development and Reform Commission and the Energy Bureau have been working on removing key coal contracts and promoting a more market-driven pricing system for coal. A comprehensive reform plan is expected to be rolled out soon. He noted that in 2012, the drop in coal prices—driven by increased production, higher imports, and lower demand—helped ease the coal-electricity conflict. However, despite this, thermal power companies continued to suffer heavy losses.
According to Chen, the government's upcoming supporting policies, especially those related to coal price adjustments, will significantly impact power generation companies. He pointed out that linking electricity and coal prices has both pros and cons. On one hand, it promotes fair competition among power generators and helps establish a standardized evaluation system. On the other hand, the negative effects outweigh the benefits, particularly in regions like the northeast and Shandong, where many key coal contracts are in place.
Chen emphasized the need for national policy reforms and urged power companies to prepare for these changes. He suggested establishing a real-time linkage mechanism between coal prices, on-grid tariffs, and sales tariffs. This would help reduce the burden on power companies and allow for better cost management. In areas like the northeast and Shandong, where the impact is most severe, electricity prices should be adjusted accordingly.
Additionally, he proposed addressing the historical debt accumulated from the coal-electricity linkage system between 2004 and 2011, with a compensation of 7 to 9 cents per kilowatt-hour. He also recommended increasing on-grid tariffs in regions such as Yunnan and Xinjiang, where coal prices are expected to rise this year.
Beyond that, Chen called for the elimination of unnecessary fees and charges related to coal, reduced transportation and logistics costs, faster development of coal emergency reserves, and improved supervision of coal markets and power capacity allocation. These measures, he believes, will help stabilize the industry and support long-term sustainable growth.Foundation Bolt,HDG Foundation Bolt,L Foundation Bolt, L Foundation Bolt Nut
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