The average cost of electricity was increased by 0.025 yuan (.003 US cents) per kilowatt hour from June 30, the National Development and Reform Commission said in a statement on its website.

The commission did not say what the percentage increase was but the average price for electricity in urban areas is about 0.48 yuan, which would make for about a 5.0 percent hike in China's cities.

"The adjustment is aimed at solving the conflicts arising from increases in coal prices, development of renewable energy, installation of desulphurisation equipment and the lack of funds for power grid expansion," the commission said.

The average electricity price at which power plants sell to power grid companies has increased by 0.0117 yuan per kilowatt hour although the actual increases vary widely in each province.

China last increased power prices in May last year when it introduced coal-electricity price adjustments after power producers complained bitterly about surging coal prices and sharp demand by coal-fired power plants.

Authorities are however wary of raising prices too sharply amid concerns the increased financial burden could spark public discontent and hit state company profits.