China's energy producers are earning more after the National Development and Reform Commission allowed them to raise tariffs in May last year and two months ago to help offset the rising price of coal. They are also struggling to match demand amid a booming economy.

Huadian, the third-largest Hong-Kong-listed mainland electricity producer in terms of installed capacity at the end of last year, produced 8.9 per cent more electricity in the period from a year earlier, at 24.86 million megawatt-hours.

Operating profit margin improved 0.3 percentage point to 15.6 per cent.

Huadian most recently raised tariffs in June by up to 4.4 per cent, or about 11 yuan per megawatt-hour, the company said last month.

The company plans to double its installed capacity to 16,477 MW in 2008.

It had set aside 16.8 billion yuan for capital spending this year and 13.8 billion yuan next year, up from last year's 7.5 billion yuan, the company said in March.

Most of the plants would be completed after next year, limiting how much the company might benefit from power shortages, HSBC analyst Michael Lee said in a report.

According to the commission, the country's power shortfall may narrow to less than 10,000 MW this year from 25,000 MW last year as utilities add plants and equipment.

The aggressive expenditure might need another round of equity financing, which might create further dilution for shareholders, the HSBC report said.

Huadian, which is based in Shandong province, raised 1.93 billion yuan by issuing 765 million yuan-denominated A shares in January last year for capital spending and to buy power plants from its parent company.

Huadian's H shares fell 0.5 per cent to close at HK$1.94, while its Shanghai's A shares fell 0.4 per cent to 2.24 yuan before the earnings announcement yesterday.