SHENYANG - China will reform the pricing mechanisms for electricity and refined oil products this year, an official with China's top economic planner said Wednesday.

Peng Sen, deputy chief of the National Development and Reform Commission (NDRC), said at a work conference that the country will initiate a tiered pricing system for household electricity consumption in the first half of this year.

The NDRC released a proposal on a tiered electricity pricing mechanism for residents in October 2010 to seek public opinion.

According to the proposal, electricity prices for residential users would be charged in three tiers set by the NDRC in accordance with the amount of power consumption.

Peng said that the NDRC adjusted the proposal last year after reviewing public opinion.

The government has decided that 80 percent of households will be included in the first tier of the new mechanism. For those households, electricity rates will not be raised.

The price for the second tier will be 0.05 yuan per kwh (kilowatt hour) higher than the first tier, while the third tier will be 0.2 yuan higher than the first tier, according to Peng.

Peng said that local authorities can roll out the tiered pricing system at an appropriate time based on their situations in the first half of this year.

For instance, local authorities have to decide on the upper limit of power consumption that falls into the first tier, and they should hold a hearing on the pricing plan to seek public opinion before implementation, according to Peng.

"Tiered power pricing is a relatively good embodiment of the direction of reforms toward market-oriented pricing of resource products, the general requirement of energy conservation and emissions reduction, as well as the general principle for properly adjusting income distribution relations," Peng said.

Peng also said that China will reform the pricing mechanism for refined oil products this year by reducing the price adjustment cycle and enhancing the transparency of the pricing mechanism.

China's current oil pricing mechanism was introduced in May 2009. The system gives the NDRC the right to adjust domestic fuel, diesel and gas prices when average prices for Brent, Cinta, and Dubai crude oil move by 4 percent within 22 consecutive working days.

"The mechanism has played an important role in ensuring energy supply security and further promoting a market-oriented oil pricing system, but there have been problems during implementation," Peng said.

For example, the adjustment cycle is too long and the adjustment cannot reflect the changes in international oil prices in a timely manner, he said.

Peng said the new mechanism will shorten the cycle of adjustment to reflect global oil prices more quickly and will increase pricing transparency. "The key is to ensure the country's energy security and market supply."

The most recent hike of domestic oil prices was announced by the NDRC on March 19. Gasoline and diesel prices were raised by 600 yuan (95.37 US dollars) per tonne.

The adjustment raised the benchmark retail price of gasoline by 0.44 yuan per liter, and that of diesel by 0.51 yuan per liter.

The latest change marked the 18th adjustment of oil prices since 2008, among which 13 were rises and 5 were reductions.

Peng also said at the conference that China will promote reforms in four major aspects this year:

China will further coordinate relations between the government and the market to make better use of the fundamental role of the market in allocating resources.

It will continue to balance the distribution of fiscal resources between the central and local governments and between all levels of local governments.

China will strike a balance in the relationship between urban and rural areas, and will balance economic and social development, Peng said.