Hunan to Unveil Progressive Gas Tariffs in Three Cities

The pricing bureau of Hunan in central China will unveil a progressive residential gas pricing tariff next month for the province's three largest cities in an effort to promote efficient residential gas use.

The bureau will hold a public hearing on Nov. 2 to introduce the tariff, which will be implemented in Zhuzhou, Xiangtan and the provincial capital, Changsha, the bureau announced on Tuesday. The three cities were home to nearly 14 million people at the end of 2010, equivalent to nearly 20 percent of Hunan's population.

Under the two-tier system, households in the three cities will be charged the present rate of RMB 2.45 ($0.39) per cubic meter (cm) for the first 600 cm they use in a year, while usage in excess will be charged at RMB 3/cm ($0.48), according to the announcement.

"The introduction of tiered retail pricing structures will become a trend in China over the next few years," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University in Fujian Province. Progressive tariffs are a good way of encouraging fair and efficient gas distribution to end-users, Lin told Interfax on Wednesday.

"Gas is a limited resource, so prices will inevitably rise in the future. Under the tiered structure, it is fair to charge the ordinary and low-income residents less and the high-income residents more because the latter are always the heaviest users," said Lin, adding that the structure would promote energy conservation in wealthy households.

A number of other provinces are considering the introduction of progressive gas tariffs. Nanjing, the capital of Jiangsu Province, held a public hearing in August on a proposed tiered pricing structure that would cover 95 percent of local households, while Guangdong Province's pricing bureau called for the gradual adoption of such a system for the residential sector last week.

Henan was the first province to implement progressive residential gas tariffs, rolling them out in 14 cities in December last year.

Hunan's gas needs are met by the West-East Gas Pipeline (WEP) operated by China National Petroleum Corp., and from gas fields in Chongqing Municipality via the 719-kilometer Zhongwu Gas Pipeline.