US$11m fine in China's 1st power pricing case

The National Development and Reform Commission fined the Shanxi Province Electric Power Association and 23 thermal power plants 73.38 million yuan (US$10.92 million) for monopolistic pricing, settling China’s first antitrust case on power supply, the top economic planner said yesterday.

The Shanxi Province Electric Power Association made some domestic thermal power companies sign a pricing agreement on January 14, 2016.

Under the agreement, the companies sold their electricity at a discount of no more than 0.02 yuan per kilowatt-hour from the standard price, and set a minimum electricity price of 0.3 yuan per kilowatt-hour. 

This was reported to the national pricing supervision platform and relevant departments in Shanxi Province two weeks later because it violated antitrust laws, the NDRC said.

China initiated power pricing reform in 2015, which demands competitive pricing among power plants. They are encouraged to sell electricity directly to users and discuss prices with them.

While normally power plants nationwide cut over 0.04 yuan per kilowatt-hour in their prices compared with the standard price, the punished companies monopolized the prices in Shanxi to keep their profits, said Alex Liu, an analyst at UBS who specializes in energy and public utilities.

The involved companies cover the local branches of four state-owned power giants — China Datang, China Guodian, China Huaneng and China Huadian — four provincial power groups at Shanxi, and 15 other power plants. They each paid fines equal to 1 percent of their half-year sales, which altogether totaled 72.88 million yuan.

The provincial electric power Association was fined 500,000 yuan.

Such practices go against the nation’s call to give the market a more decisive role in power pricing, which hurt the benefits of enterprises and personal consumers, the NDRC said on its official Weibo account yesterday.