CHINA may have to raise electricity prices because high coal prices are squeezing the profit margins of coal-fired power generation companies, but a decision hasn't been made yet due to concern about inflation, said Wang Yeping, a vice chairman of the State Electricity Regulatory Commission.

Wang, speaking at a press conference Tuesday, said Chinese power plants' stocks of thermal coal had fallen again from March after a severe shortage in February triggered by heavy snows.

Wang didn't elaborate on the reasons for the continuing decline in stocks, but analysts said that high coal prices have prompted power producers to lower stocks in order to reduce costs, leaving them vulnerable to sudden disruptions of supplies.

Power companies are urging the government to raise State-controlled electricity prices so that higher costs can be passed on to end users, as occurred in April 2005 and June 2006, when the government raised electricity prices by 0.02 yuan to 0.03 yuan per kilowatt-hour or around 4percent to 5 percent each time.

Under a policy implemented in 2004, if coal prices rise more than 5 percent, the government planned to transfer 70 percent of the increase to end users by raising electricity prices, while producers would digest the remaining 30 percent, Wang said.

But high inflation prevented the government from raising electricity prices last year, Wang said, without indicating whether it might hike prices this year.

China's consumer price index accelerated to its fastest pace in almost 12 years at 8.7 percent on year in February, and remained high at 8.3 percent in March.

The coal stocks of major power plants fell to 12 days supply Sunday, from 15 days at the start of March, said Wang, adding that power plants in the provinces of Hebei and Anhui and the city of Chongqing have stocks for no more than seven days.

China's thermal coal stocks totaled 46.69 million metric tons Sunday, down roughly 12 percent from 53 million tons at the start of March, he said.

(SD-Agencies)