The aluminum industry has been suffering from overcapacity for years, depressing prices and forcing many producers, including Aluminum Corp of China Ltd (Chalco), the country's top aluminium maker, to suffer heavy losses.
The move to revise power tariffs, which account for about 40% of a smelter's operating costs, is the latest in a series of measures to slim the sector and comes as Beijing has vowed to let market forces play a decisive role in the allocation of resources.
Power prices will remain unchanged for smelters that do not use more than 13,700 kilowatts (KWs) for each tonne of aluminium produced, while those that use between 13,700 - 13,800 KWs will be charged an additional 0.02 yuan per KW, the National Development and Reform Commission (NDRC) said in a statement.
Smelters that consume more than 13,800 KWs of power for each tonne of aluminium produced will be charged an additional 0.08 yuan per KW, the NDRC said.
Plants that exceed the 13,700 KWs/tonne threshold will also be barred from direct negotiations with power companies for lower energy prices.
The NDRC said local governments must not arbitrarily reduce power prices for aluminium companies and must stop all previously offered subsidies.
Local governments must also stop giving fee deductions and other incentives to smelters that are equipped with their own power generators, the NDRC said.
China currently has about 30 million tonnes of primary aluminium smelting capacity annually, but less than 24 million tonnes of yearly capacity operated in November 2013, based on official production data.