China plans to cut on-grid thermal power tariffs to reflect the fall in coal prices, in spite of oppositions from power generating companies, sources reported.<br /> <br /> The government may cut on-grid thermal power tariffs by around 0.01 yuan/KWh, said one source close to the National Development and Reform Commission (NDRC).<br /> <br /> The tariff cut would vary slightly in different areas, and eastern provinces may see a cut higher than western inland provinces, sources said.&nbsp;<br /> <br /> One insider with a Jiangsu-based utility disclosed that the province’s thermal tariff may cut by 0.11 yuan/kWh, and the NDRC may announce adjustments mid or late this month.<br /> <br /> If implemented, China’s top five power groups may see their profit drop over 1 billion yuan ($ 162.34 million) each during the second half of the year, said one company insider.<br /> <br /> Analysts said the tariff cut could translate into coal price change of 20-25 yuan/t, and may prompt power plants to further press down coal prices.<br /> <br /> Prices of thermal coal, used primarily for power plants, have falling significantly since this year, mainly due to low demand and high stocks at utilities and ports.<br /> <br /> Under a new coal-power price linkage mechanism implemented since 2013, power tariff would be adjusted if coal price changes exceed 5% in a six-month period.<br /> <br /> The Fenwei/Platts CCI1 Index for domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was assessed at 469.00 yuan/t on August 6, inclusive of VAT, FOB basis, down 31 yuan/t or 6.2% from the start of July. The index has dropped 16.25% compared with six months ago.<br /> <br /> <p> Most thermal plants were against the adjustments, as they just started to make profit after suffering deficits over the past years. Data from China Electricity Council showed that around 20% thermal power groups posted deficit in 2013. </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20140808/20140808163606_7943.jpg" alt="" /> </p>