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Senior officials from the government's top pricing and tax decision-making group yesterday said China has e up with a pricing system for electricity generated by renewable energy.

The government will also raise the price of electricity for domestic customers from the start of next year by a small margin.

The new electricity pricing mechanism will acpany the country's first law on renewable energy, which will e in at the beginning of next year.

It will set the price at which generators of electricity can sell their power to grid panies.

This will be different from region to region due to differences in economic development, and will be within a range of 0.49 yuan to 0.69 yuan (0.06 US cents to 0.085 US cents) per kilowatt-hour (kwh), said Wang Zhongying, director of the centre for renewable energy development under the National Development and Reform mission (NDRC).

The NDRC unit is responsible for making regulations for the renewable energy law.

Wang was speaking at the International Forum on Tax and Fiscal Policies to Promote Sustainable Development, hosted by the Energy Foundation yesterday in Beijing.

Keynote speakers at the forum also included Vice-Minister of Finance Lou Jiwei and Vice-Minster of the NDRC Zhang Guobao, who said the government is considering levying a windfall tax on the country's top two oil panies, Sinopec and PetroChina. This could happen if crude prices remain high.

Zhang also said further tax incentives should be given to hydro and wind power producers.

Wang said the price-setting body at the NDRC is now collecting feedback about the proposal.

He said the additional money that it costs to produce renewable-energy electricity will be paid for by customers.

"There will be a slight (electricity) tariff increase next year, which will be less than 0.01 yuan (0.0012 US cents)," Wang Fengchun, deputy director-general of the research department under the environmental protection & resources conservation mittee of the National People's Congress, yesterday told China Daily.

However,

poorer people, residents in the Tibet Autonomous Region, cities and counties powered by their separate electricity supply work (off the national grid), as well as the agricultural sector, will not pay the additional charges, Wang Zhongying said.

According to the pricing proposal, the Minister of Finance will establish a special account and return the extra money to the country's grid panies, including the State Grid Corp of China and China Southern Power Grid, Wang Zhongying said. This will offset the higher cost of buying green electricity.

Wang Fengchun said there he been some plaints from the electricity sector that the new tariff for renewable energies is still too low, but Wang Zhongying yesterday said no big setbacks exist to prevent the new pricing system from taking effect next year.

Remarks from senior officials yesterday also showed a government determination to increase taxes on State-owned resources, such as oil and coal, to better reflect their value.

"The country's big energy panies, such as Sinopec and PetroChina, are making windfall profits from oil resources while world crude prices remain strong," Lou told yesterday's forum.

The Ministry of Finance will levy a special tax on both oil panies if crude prices stay above US 40 per barrel, since the operating costs of oil exploitation is only US 12 per barrel on erage, Lou said.

He yesterday refused to ment when asked about the timetable and amount of the oil tax, but said Sinopec and PetroChina he reached an agreement with the ministry about the new tax.

The ministry is also considering charging the country's State-owned coal miners for mining rights, but the proposal has met strong objection from the China Coal Industry Association, which represents the interests of State-owned coal panies, Lou said.

The NDRC's Zhang yesterday said value-added tax for wind power generators is still too high.

China has vowed to use renewable energy to supply 15 per cent of the nation's electricity needs by 2020, pared with the current level of 7 per cent

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