State Council unveils a six-point strategy to battle a nationwide energy problem The State Council has unveiled a six-point strategy to resolve the mainland's chronic power shortages, highlighting the importance of the issue in the central government's policy agenda. While most of the policy directions have previously been discussed, put in place or subjected to local trials, the directives will give local government officials a foretaste of possible administrative measures Beijing can enforce as it grapples with power shortages that have hit industrial production and residential consumption nationwide. In a conference convened by Vice-Premier Zeng Peiyan, government officials said the country's power consumption growth rate had exceeded 15 per cent year on year for 17 consecutive months, resulting in various degrees of power rationing in 21 of China's 31 provinces and self-administrative regions. Last year, rationing occurred in 12 provinces. The policies include improving the distribution efficiency of power grids; speeding up construction of power plants and grids; resolving price conflicts in the coal and electricity industries; improving coal transport efficiency; implementing time and season-variable power pricing; and enhancing the operational security of power grids. Implementation details are scant, according to state media reports. Coal-pricing conflicts are one of the more immediate issues, with power prices set by local price bureaus not being adjusted regularly to reflect market changes, while coal prices are deregulated and negotiated between power and coal firms. This results in wrangling between coal-using power firms and the coal suppliers over prices, because power firms cannot adjust tariffs to reflect cost changes. The government was forced to intervene in the dispute last year and the next annual coal contract negotiation will take place before the end of the month. 'The policies will not resolve the shortage problem in the near term,' Lehman Brothers head of Asian utilities research Angello Chan said. 'But given its high priority in Beijing's agenda, it will only be a matter of time.' Meanwhile, the National Development and Reform Commission and the China Electricity Regulatory Commission recently held a seminar with power firm executives and local government officials to discuss implementation of power demand and supply management, according to China Power News. The commissions will form a committee to oversee implementation and expansion of time and season-variable power pricing at the local level to cut peak demand and raise off-peak demand. The policy, which charges higher tariffs during peak usage hours and seasons such as summer and winter, is seen as a more effective way to manage power demand and encourage better usage of power generation and distribution assets.