By intern reporter Li Zengxin

A trade group representing China’s power suppliers has released a report showing that growth in electricity use slowed significantly nationwide in February as the state tightened its grip on companies with high energy consumption levels during a period of severe winter storms.

The nation’s overall electricity use increased 11.93 percent in the first two months of 2008 compared with the same period last year, but the growth rate fell 4.8 percent, according to the March report by the China Electricity Council (CEC). 

The report said energy use in the “secondary industrial sector,” which includes manufacturing and construction, declined 8.58 percent in the January-February period partly due to state-controlled energy allocations during February snow and ice storms that ravaged large sections of southern China. A number of power plants were affected by coal shortages during the storms, and limited supplies of electricity had to be rationed according to residential and industry priorities.

Li Chunguang, a power industry consultant, told Caijing that the restrictions had a cooling effect on companies that consume high levels of energy.

State controls create a disparity between prices for electricity and the coal that’s used to generate 70 percent of China’s power. Li predicted that electricity fees will rise later this year, however, after subsiding inflation risks give the central government more room to close the gap in energy prices.

Nevertheless, he said, companies will have to follow Beijing’s new procedures for energy allocation.

“It used to be that high energy-use companies only needed approval from provincial level environmental agencies to operate,” said Li. “But now permission must come from the (central government) Ministry of Environment, which is very strict on reviewing and approving such projects.”

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