The government plans to resume pegging the cost of electricity to coal prices, an official at the National Development and Reform Commission (NDRC), the country’s top economic planning agency, said Friday.

Electricity prices in China are controlled by the government.

Late last year, NDRC decided to allow domestic power producers and thermal coal suppliers to negotiate and set the price of this year’s coal contracts themselves.

But, so far, the two parties have yet to agree on a price. Coal suppliers are asking for prices that power producers, concerned about their profit margins, are unwilling to pay.

If NDRC resumed pegging the price of power to coal, electricity tariffs are expected to rise given a bullish outlook for international coal prices.

“If coal prices go higher, power tariffs will certainly go higher under the mechanism,” the NDRC official, who declined to be identified, said.

“But so far, it's hard to say how much the power tariffs will rise.”