The NDRC, which sets energy policy for the world's second-largest power user, did not give an average percentage increase, or say how much the rate at which electricity firms sell to the grid -- which varies from province to province -- would go up.

But China's top independent, Huaneng Power International Inc., said it had raised tariffs between 1.0 and 7.3 percent, adding that plants with equipment to strip acid rain-causing sulphur off waste gases were allowed to charge a supplement.

"The power price hikes are generally in line with the market's original expectations," said Alex Fan, an analyst at Daiwa Securities in Hong Kong.

"The only surprise, a positive surprise, is the extra... increase for power plants with desulphurisation facilities. That's something that has not been taken into account," he added.

Hong Kong-listed power stocks including Datang International Power Generation Co., Huadian Power International Corp. Ltd. and Huaneng rose after the announcement. Small play China Resources Power Holdings Co. Ltd. leapt more than 11 percent.

The NRDC said the rise aimed to boost investment in the grid. The China Securities Journal put the increase in on-grid prices at an average 0.01174 yuan per kilowatt-hour, suggesting over half the retail rise could go to grid operators.

China's transmission fees make up only around a quarter of the retail price, compared to 50 percent in more mature markets, discouraging investment in the ageing network, a top official said recently.

CLEAN AIR PREMIUM

Analysts had expected an early summer increase under a mechanism brought in last year, which allows the government to pass on up to 70 percent of thermal coal cost increases.

But the price increase for cleaner plants showed a pioneering willingness to use economic incentives to promote a cleaner energy drive and tackle the smog that cloaks many Chinese cities.

Top officials have pledged to eventually liberalise energy prices as part of a drive to boost efficiency and curb growing dependence on foreign oil and polluting coal.

But planners have been hesitant to take dramatic steps that might feed public discontent or push uncompetitive industries into the red, particularly with power.

"The government is much less determined in reforming power price than oil prices, because power price increases have a much wider impact than oil," said power analyst Zhang Chi, at Cambridge Energy Research Associates.

But tame inflation in China -- consumer prices rose just 1.4 percent in the year to May -- means costlier energy will cushion deflationary pressure from excess capacity in industries such as car making and cement.

The rise could push up summer oil demand growth, which already hit a blistering 13.5 percent in May, by encouraging fuel-oil powered stations to ramp up generation, but it will have minimal immediate impact on the market, traders said.

Buyers had anticipated the rise and stocked up in recent months due to falling inventories and lower benchmark Singapore prices.

With no further immediate increase, margins are likely to stay under pressure, as the country prepares to swing from years of power shortages to a generating glut.

"At the moment, we don't expect another round of tariff hikes. So far this year, coal prices in China have been quite stable," said Pierre Lau, analyst at Citigroup.