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Forum
Print Edition> Forum
UPDATED: May 28, 2012 NO. 22 MAY 31, 2012
Is Tiered Pricing for Electricity a Good Idea?
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Liu Chunyin (The Beijing News): The tiered pricing for electricity intends to maximize fairness and efficiency in electricity consumption. In modern times, electric products like fridges, air conditioners, washing machines and micro-wave ovens are in wide use among ordinary families, and so the basic consumption quota should not be set too low.

An investigation conducted by China Youth Daily shows that 81.7 percent of the 2,432 respondents say that they expect the price can be set higher for excessive consumption and lower for the minimum consumption.

Electric grid companies should try to reduce their costs by upgrading technology and improving management, not just raising electricity prices. The interests of the country, the electric power industry and the public should all be paid attention to, but the public's interests should come first. A reasonable price reform should not add economic burdens to middle- and low-income families.

Yuan Junbao (news.enorth.com.cn): Some representatives to the tiered pricing hearings say that the quota for basic consumption in their regions is too low to satisfy daily use. Therefore, necessary data for household electricity consumption should be open to the public to increase the credibility of the pricing reform.

In some provinces, the consumption difference between rural and urban areas is neglected, and the pricing reform draft has not considered the difference of each family in terms of total family members. Also, the difference of consumption in different seasons is also neglected. For example, people tend to consume more electricity in summer and winter than at other times. Lastly, how to use the extra profits from an electricity price hike should be made open to the public as well.

Deng Yuwen (www.dayoo.com): The plan to raise the price of household electricity is based on the reality that China's energy shortage is accompanied by the waste of energy. If we mean to leave some resources to future generations, we have to make some sacrifices, like accepting a price hike for electricity.

For so many years, in order to promote rapid economic growth, the prices of many resources, including water, electricity, gas, petroleum and land, have been strictly controlled by the government at a very low level. As a result, there is serous waste and also severe environmental pollution. Take the electric power industry as example. At present, 70 percent of China's electric power is generated by coal, and this industry is a major polluting source in China.

In order to realize sustainable economic growth and environmental protection, the price of resource products must reflect the realistic condition of certain resources: Whether it is in short supply or is seriously polluting the environment, and so on.

As the problem of energy and environment becomes increasingly striking, the leverage of price will be an important tool to curb unreasonable energy consumption and thus reach the goal of environment protection.

Today, high-income families, which make up 5 percent of the whole, consume 24 percent of the total household electricity consumption. But the fact is that household electricity consumption is now enjoying state subsidies. Obviously, the subsidy is encouraging extravagance in energy consumption.

According to the NDRC, the new pricing system will be divided into three tiers. The price for the quota of the first tier, which was set based on the average use of 80 percent of China's households, will remain unchanged. If a family consumes more than the average quota, they'll have to pay a price that is 0.05 percent higher than the original one.

Even if the price of electricity is raised, it seems that it won't cost people too much every year. However, the public's daily expenses cover so many other items. Because of inflation, if all items are experiencing price hikes, it will become a huge burden on the public.

The pricing reform also includes certain free-of-charge electricity quotas for low-income families. It's great, and more people should be covered by this favorable policy.

Price hikes for household electricity is a trend, but the pricing reform should not target ordinary consumers alone. The electricity industry also needs reform. Otherwise, the fruit of price increases will be mostly eaten up by monopoly enterprises. In this way, ordinary people are subsidizing power enterprises and the waste of energy will continue.

Dear Readers,

"Forum" is a column that provides a space for varying perspectives on contemporary Chinese society. We invite you to submit personal viewpoints on past and current topics (in either English or Chinese).

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