June 30 (Bloomberg) -- China, the world's second-biggest energy user, raised electricity prices for the first time in more than a year to help power companies pass on the higher cost of coal.

Huaneng Power International Inc., the nation's biggest generator, today raised tariffs as much as 7.3 percent. Increases average 25 yuan ($3.13) per megawatt-hour, said the National Development and Reform Commission, the top economic planner. Chinese power company stocks rose in Hong Kong.

China sets power prices to curb their impact on inflation and shield consumers from rising energy costs. The government is gradually helping generators cover the cost of coal that soared amid economic growth exceeding 10 percent. Higher prices may encourage use of cleaner fuels and equipment to cut pollution in a country that burns coal for two-thirds of its electricity.

``Overall, the power price increase is neutral to slightly positive for the power companies,'' Alice Hui, a power analyst at UBS AG in Hong Kong, said today. ``Power plants with desulfurization facilities can levy higher charges and that is encouraging on environmental grounds. The government wants the companies to be more energy efficient in power generation.''

Huaneng Power said the largest increase in its prices was in the eastern province of Shandong, where tariffs rose to 381.4 yuan per megawatt-hour. It raised prices in Guangdong, a manufacturing hub for China, by as much as 6.2 percent to 497.71 yuan per megawatt-hour, the company said in a statement published in Hong Kong newspapers today.

New York, Tokyo

The average price a household pays for electricity in Shanghai rises to 635 yuan ($79) per megawatt-hour during peak demand, based on Shanghai Municipal Electric Power Co. figures. In New York, average prices for one megawatt-hour of electricity start at $179, based on the Web site of Consolidated Edison Co., owner of New York City's electric and natural-gas utility. Tokyo electricity charges start at 15,300 yen ($133) based on figures on the Web site of Tokyo Electric Power Co., Asia's biggest power producer.

A megawatt-hour can power a 3,500 watt air conditioner for 286 hours.

China Power International Development Ltd., the smallest of China's five independent power producers listed in Hong Kong, raised tariffs as much as 15 percent, it said in an e-mailed statement.

The price increases will help ease the impact of higher coal costs, promote the development of renewable energy and use of desulfurization units at power plants, and boost spending on power grids, the Commission said in a statement posted on its Web site.

Renewable Energy

The power increases include a 1 yuan per megawatt-hour charge to reflect the higher costs of generating power from renewable sources, according to a statement posted on the Web site of the Beijing Municipal Commission of Development and Reform.

The Chinese government announced rules for setting prices on electricity generated from wind, solar and biomass in January. Power generators that use renewable fuels are allowed to charge higher rates to power grid operators than coal-fired plants, with the additional cost split among grid operators and partly passed on to retailers.

Qu Hongbin, an economist at HSBC Plc in Hong Kong, said today's price increases won't significantly fan inflation because utility charges have a ``relatively low'' weighting in the consumer price index. China doesn't disclose the exact weighting, Qu said, adding that his ``best guess'' is that it's about 5 percent of the index.

Gasoline, Food

``There will be an effect in terms of lifting the consumer price index but it won't change the overall picture of low inflation,'' he said. China ``is likely to continue increasing energy prices, it's just a matter of at what pace.''

China's consumer prices rose at the fastest rate in four months in May as the cost of gasoline and food increased. The consumer price index climbed 1.4 percent from a year earlier after rising 1.2 percent in April, the Beijing-based National Bureau of Statistics said June 12. Inflation outpaced the median 1.3 percent forecast in a Bloomberg News survey of 20 economists.

Inflation in China, the world's fastest-growing major economy, has accelerated from 0.8 percent in March. The People's Bank of China warned on May 31 that fast investment growth, rising wages and liberalization of fuel prices may stoke more gains.

Shares of Huaneng Power rose 3.5 percent to close at HK$5.15 after the increases were announced. Datang International Power Generation Co., the second-largest Chinese generator listed in Hong Kong, gained 3.9 percent to HK$5.4.

China Resources

Shares of China Resources Power holdings Co., the third- largest Hong Kong-listed power generator by market value, had their biggest gain since the company's November 2003 listing. The stock rose 12 percent to HK$6.5 and earlier surged as much as 21 percent. Huadian Power International Corp., the fourth- largest, rose 3.5 percent to HK$2.2. China Power International closed unchanged at HK$2.85, after gaining as much as 2.6 percent.

The Chinese government first linked power prices to increases in coal costs in May 2005, increasing power prices by about 25.2 yuan ($3.2) for each megawatt-hour under a system that allows utilities to pass on 70 percent of their increased bill for the fuel.

The price of fuel oil, burned by some power plants, at the Shanghai Futures Exchange has gained 17 percent in the past year.

`Long Due'

``It's long due and expected,'' Lei Wang, who helps oversee about $20 billion including Datang shares, at Thornburg Investment Management inc. in Santa Fe, New Mexico, said of the increase.

China, the world's biggest coal producer, relies on coal and oil for 90 percent of its energy needs. Spot prices for steam coal loading out of Qinhuangdao, China's biggest coal port, peaked at $55 a ton in June 2005 and have fallen 5.6 percent over the past year, according to McCloskey Group. The price for steam coal on May 19 was $51 a metric ton, compared with $54 a ton on May 13, 2005.

Typically, new coal-fired generators use about 300 kilograms of coal to generate one megawatt-hour of electricity, compared with outdated units that use as much as 500 kilograms of the fuel for the same output, Zhang Guobao, vice chairman of the planning commission said June 8.

To contact the reporter on this story: Wing-Gar Cheng in Beijing at wgcheng@bloomberg.net; Ying Lou in Hong Kong at ylou1@bloomberg.net.

Last Updated: June 30, 2006 06:31 EDT