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China raises power prices amid shortages

AP - Wednesday, August 20

BEIJING - China has raised wholesale electricity prices for the second time in two months to offset soaring coal prices blamed for shortages that threaten to disrupt the economy.

The surprise decision late Tuesday to impose a new increase so soon after a price hike in July highlighted Beijing's struggle to ensure adequate power supplies for the booming economy, which is expected to grow by at least 9 percent this year.

Wholesale power prices charged to distributors will rise by about 5 percent, the Cabinet's National Development and Reform Commission said.

It did not raise retail prices, which will shield households and companies but squeeze profits for power distributors.

That comes on top of a 4.7 percent increase announced in July to help utility companies that have been hit by record-high coal prices.

The government has warned that coal stocks are dangerously low at many power plants because utilities have let them run down rather than replenishing them at current high market prices.

More than 80 percent of Chinese power generation companies lost money in the first seven months of this year, the official Xinhua News Agency said.

Coal consumption is expected to rise by 11.5 percent this year to 1.5 billion tons, Xinhua said.

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