China's Power Industry Regulation And Competition Law Issues

The legal regulations of the natural monopoly have deep law and economics origins. Measures or elasticity questions of legal regulations of natural monopoly have become common topics in law circles and economic educational circles.As a traditional monopolistic industry, the power industry is a vertical business field system consisting of electricity generation, transmission, distribution and retail. It has typical features of natural monopoly such as network, enormous sunk cost, specificity, scale economy and common service. Considering its importance to national economy and technological requirements, "Nationalization with Government Supervision" is a traditional model adopted widely by market-oriented economy countries. Traditionally, various countries take section exemption with regard to monopoly of the natural monopoly trades and bring not only monopoly behavior but also monopoly state into the exemption from application of anti-monopoly law system. Actually, with the development of economy and technology, the power industry no longer maintains the complete features of natural monopoly. Research results of Economics show that the internal inefficiency in enterprises produced by traditional regulations, technical improvement of the power industry and the expansion of demand in electric power market make the links of power generation and sales which have natural monopoly characteristics present potential competition gradually. Because of the coexistence of rationality and competition in natural monopoly industries we have more difficulties in working out the legal regulations of the power industry. The positive of competition is remarkable. It advantageously improves the social development and promotes the valid movement and the optimal allocation of resources. Besides, it can meet consumer's needs and safeguard their interests. The market regulation is one that the national institutions exert public rights to intervene in the social economic life and regulate monopoly and unfair competitive behaviors. Therefore, in the case of co-existence of the regulation and competition, we should harmonize the both. In order to accomplish effective competitions in the industry, a reasonable balance must be found among monopoly, competition and supervision.The market-oriented reform of electricity industries has been carried out universally in China since 2002. Though the monopoly pattern in which electricity generation is integrated with power transmission and power distribution has been broken up and competitive system has formed, there exist lots of questions such as oligopoly and disordering competition in power generation field, abusive behaviors of the power grids' monopoly, the division of power network and disfigurements of the laws and regulations for the electric power supervision and management. The mutual reason of those problems is the serious loss of law and regulations of the Power Industry in China during the separation of government and enterprises and the building of competitive electric market. In addition, some important laws, especially the current Electric Power Law does not satisfy practical demand and requirements of new situations. Based on the study towards individuality and generality of regulation and reforms in electricity market at abroad, the author summarizes three common characteristics: legislation should be done first and be led by the government; the independent supervision and management institutions must be set up; difference should be firstly made between natural monopoly operations and non-natural monopoly ones. The legal regulation of power industries in China can benefit from the results. The author further brings up the principles of the regulations by law in our power market reform. These principles are proper regulation, effective competition, interests overall consideration and sustainable development. In the author's opinion, the regulators of legal regulations of the power industry are composed of government, the anti-monopoly law enforcement organs, the anti-unfair competition institutions, the consumer rights protection institutions and supervision agencies of electricity market. However, the regulated are power generation enterprises, transmission enterprises, power supply enterprises, consumers and power dispatch organizations. At the present stage, there are multiple trading behaviors such as power supply service, the wholesale and direct power supply for large customers in china's power trading system, forming a multi—level and multiform system. Therefore, it is urgent to accelerate the process of legislations and perfect the power law system to give full play to functions of electricity market mechanism. Based on the objective and requirement, Electric Power Law of the People's Republic of China should be evaluated as a "modem economic law" in the background of power market reform. The new legislative purpose lies in building up a fair and orderly power market and optimizing the resources' allocation. Only in this way can we make the new law have its own distinctive market characteristics.To be known as economic constitution, Anti-Monopoly Law has a good reputation for protecting the normal development of market economy. The future Antimonopoly Law should be applied to the whole power industry except for exemption of the market structure of natural monopoly sector. That is to say, we adopt the model "Apply on general occasions; exempt on exceptional occasions". The relationship between items of anti-monopoly in Anti-Monopoly Law and the Electric Power Law is the relationship between special law and common law. Possessing certain presuppositions, law in a certain industry which is considered as special law is prior to common law, the anti-monopoly law. The Anti-monopoly Law Enforcement Organs should cooperate with State Power Regulatory Commission on the issue of regulations to monopoly conduct of the power industry. This cooperation reflects the comprehensive coordinating and jointing of the jurisdiction of the both and the law exclusive jurisdiction of the State Power Regulatory Commission.