BEIJING - The power shortage in China is mainly due to a thermal power supply slump as the power companies are struggling financially, said State Electricity Regulatory Commission (SERC) officials on Thursday.

Increasing demand and lingering drought in China also has contributed to the power supply shortage, said Yu Yanshan, deputy director of the office of the SERC, after the release of a 2010 annual report on electricity regulation.

The overall deficits for China's five major thermal power plants topped 60 billion yuan ($9.23 billion) since 2008, according to the annual report.

Rising raw material prices of coal had hit thermal power plants in the pocket and some generators had been shut-down in provinces of Guizhou, Shaanxi, Henan, Shanxi, Hunan and Qinghai, said Yu.

Last week, central China regions and Chongqing city had started rationing power, according to the SERC.

The decline of newly-added thermal power capacity was also to blame for the power shortage as the investment dipped to 130 billion yuan in 2010 from 200 billion yuan five years ago, Yu said.

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China's newly-added thermal power capacity stood at 10.01 million kilowatts (kW) in the first quarter this year, 2.68 million kW less than the same period last year.

Thermal power accounted for 75 percent of China's total installed power capacity and 82 percent of the country's generating capacity, according to the SERC.

Tan Rongyao, the SERC chief supervisor, suggested lifting grid pricing to tackle the conundrum in the short run while warning that it may increase inflation expectations.

In the long run, China should strengthen regulation on power supply and production since the country has sufficient installed capacity while low equipment-use ratio, Tan said.