According to the China Government website, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council on October 8 to make further arrangements for the supply of electricity and coal this winter and next spring to ensure the basic livelihood of the people and the smooth operation of the economy. The meeting made a rare reference to the "six guarantees", an important spirit put forward during last year's epidemic, which means that the position of the "energy supply" issue is quite high.

The meeting proposed to adjust the fluctuation range of market transaction electricity prices from no more than 10% and 15% respectively to no more than 20% in principle, strengthen classified regulation, and form prices by market transactions for high energy-consuming industries, free from floating by 20%, and other six major measures to solve the problem of energy supply. At the same time, the meeting demanded that some places stop production across the board, limit production or exercise carbon reduction, and oppose inaction and random actions.

Take a look at the report!

The State Council suddenly adopted six drastic moves.

Premier Li Keqiang presided over the executive meeting of the State Council on October 8. The meeting pointed out that since the beginning of this year, energy prices in the international market have risen sharply, and the supply and demand of domestic electricity and coal continue to be tight, and a variety of factors have led to power cuts in some places recently, which have had an impact on normal economic operation and the lives of residents.

In accordance with the arrangements of the CPC Central Committee and the State Council, the parties concerned have taken a series of measures to strengthen the guarantee of energy supply. In view of the fact that the pressure on supply and demand of electricity and coal is still great this winter and next spring, the meeting stressed that ensuring energy security and ensuring the stability of the supply chain of the industrial chain is an important part of the "six guarantees," and it is necessary to give full play to the role of the guarantee mechanism for the transportation of coal, electricity, and oil and gas. Effective use of market-oriented means and reform measures to ensure the supply of electricity and coal.

It is worth mentioning that this is the time when the "six guarantees" have been mentioned again for a long time. What is meant by "six guarantees"? On April 17, 2020, the political Bureau of the CPC Central Committee held a meeting to emphasize for the first time the work of "ensuring" the employment of residents, the basic livelihood of the people, the main body of the market, food and energy security, the stability of the industrial chain supply chain, and the operation of the grass-roots level. It can be said that the position to solve the problem of energy supply and straighten out the logic of energy supply is very high.

The meeting put forward six main points to solve the problem of energy supply:

First, we must give priority to people's livelihood and ensure the livelihood of the people and the use of energy for heating in winter, especially to ensure the use of coal and electricity in Northeast China in winter.

Second, under the premise of ensuring safety in production, we should promote the release of production capacity of potential coal mines and speed up the commissioning and production of approved and basically completed open-pit mines. Transportation departments should give priority to ensuring the transportation of coal.

Third, it is necessary to support coal and power enterprises to increase power supply. In view of the difficulties of coal and power enterprises, we will implement a phased tax moratorium policy to guide financial institutions to ensure reasonable financing needs.

Fourth, it is necessary to reform and improve the formation mechanism of marketization of coal and electricity prices. We will promote all coal-fired power generation to enter the electricity market, and on the premise of stabilizing the electricity prices of residents, agriculture, and public welfare undertakings, adjust the fluctuation range of market transaction electricity prices from no more than 10% and 15% respectively to no more than 20% in principle, strengthen classified regulation, and form prices by market transactions for high energy-consuming industries, which are not subject to the limit of rising by 20%. Local governments are encouraged to give phased concessions to small and micro enterprises and individual industrial and commercial households. This is also the one that the market is most concerned about, and the electricity price ceiling of energy-intensive industries may be opened. This may be a good thing for power companies, because industrial enterprises account for about 70% of electricity consumption.

Fifth, it is necessary to promote the construction of large-scale wind power and photovoltaic bases and do a good job in coal, gas and oil reserves.

Sixth, it is necessary to resolutely curb the blind development of the two high projects. We will improve the double control mechanism of local energy consumption and promote that new renewable energy consumption will not be included in the total energy consumption within a certain period of time.

In addition, there is a very important statement at this meeting. The meeting demanded that all parties' responsibilities for energy supply and production safety should be compacted. Strengthen overall planning and consideration. All localities should implement the responsibility of territorial management, do a good job in the management of electricity consumption in an orderly manner, correct across-the-board production restrictions or exercise carbon reduction in some places, and oppose inaction and disorderly actions.

Coal-producing provinces and key coal enterprises should increase production and supply according to the requirements. The thermal power units of the central power generation enterprises should be fully distributed. Power grid enterprises should strengthen operation dispatching and safety management. Those who fail to implement the responsibility of guaranteed confession should be seriously held accountable.

"correct some places to stop production across the board, limit production or exercise to reduce carbon, and oppose inaction and random actions. "this expression is also welcomed by the market. One-size-fits-all "double limit" behavior will indeed destroy the industrial chain, but also disturb market expectations.

The energy supply situation is improving.

Recently, the policy of "guaranteed confession" has been landing intensively. From the central level, before and after the "National Day", the state-owned assets regulatory authorities held a meeting to urge the central coal power enterprises to guarantee supply and increase production. Under the premise of complying with the rules and regulations, increasing production with all-out efforts is the main policy tone of domestic guaranteed supply.

On October 3, the General Office of the National Development and Reform Commission issued a supplementary notice on doing a good job in the full coverage of medium-and long-term coal contracts in power generation and heating enterprises. The notice mainly defines the pricing mechanism for signing long-term contracts. The part of the resigned contract volume exceeding 80% of the enterprise power coal long-term association can be freely negotiated, while the part within 80% of the long-term association should be priced according to the mechanism of "benchmark price + floating price".

On October 8, according to Zhongqing net, Shaanxi Province, an important national energy base, actively performed the responsibility of regional coordination of coal supply, organized various coal-producing cities and key coal production enterprises in the province to rapidly increase coal production capacity, compiled the task decomposition table of 39 million tons of coal issued by the state to guarantee Hunan, Hubei and other 14 provinces, and coordinated and implemented the demand of 9.26 million tons of coal for power generation and heating in the fourth quarter of the province's thermal power enterprises.

Xinhua News Agency reported on the same day that a few days ago, it was learned from the Energy Bureau of Inner Mongolia Autonomous region that with the arrival of the peak period of heating and coal consumption in northern China, Inner Mongolia has made every effort to promote the release of coal production capacity, and energy, land and other departments have jointly accelerated the formalities for coal production and construction, actively implemented the resigning of medium-and long-term agreements on electric coal, and worked hard to stabilize coal supply this winter and next spring.

Ordos is a major coal production city in China. In order to stabilize the coal market, the city has recently actively promoted the start-up record and joint commissioning of qualified coal enterprises to speed up the construction of high-quality production capacity coal mines.

Since the beginning of this year, the city has obtained a total of 107 open-pit coal mines with temporary land, with an approved production capacity of 169 million tons. By the beginning of October, the city had 225 coal mines with a production capacity of 640 million tons per year, with an average daily output of more than 2.1 million tons, reaching the highest level so far this year.

In order to implement the requirements of the National Development and Reform Commission's medium-and long-term contract to fully cover coal sources for power generation and heating, Inner Mongolia actively coordinates coal sources, docks relevant provinces (autonomous regions and municipalities), and fully implements the task of ensuring supply. At present, the tasks of 53 million tons of coal in 18 provinces (autonomous regions and municipalities) have all been decomposed into 29 key coal production enterprises, corresponding to each province (autonomous region and municipality) in a point-to-point manner.

According to CITIC's calculation, the new production capacity in the fourth quarter is about 0.8 to 100 million tons, corresponding to about 20 to 25 million tons in a single quarter. Even with the increase in the seasonal expansion of stock capacity, it is estimated that there is still a supply gap of 0.3 to 40 million tons in the fourth quarter.