Research On The Price Regulation Reform Of Natural Monopoly Industry

As the basic energy industry of national economy and social development, the power industry plays an important role in guaranteeing the normal operation of national economy, ensuring national energy security and maintaining sustainable and stable development of economy and society. Because of the natural monopoly characteristics and the basic strategic position, the price regulation of the power industry has been viewed as the core of economic regulation of the government in most countries of the world. At present, the worldwide power industries are ongoing the power system reform and the power market reform taking the theme of "deregulation and introducing competition". In this process, price regulation reform which is the key of power industry reform has become the focus of growing attention. Effective price regulation mechanism is of great significance to optimize power resources allocation, promote the formation of competitive electricity markets, ensure fair distribution of society income, guarantee the simple reproduction as well as expanded reproduction and encourage enterprises to improve efficiency.Under the impetus of regulation reform of the power industry in the world, since the reform and opening up, a series of adjustment and reform measures of China's electricity price regulation mechanism have been implemented and the cost-plus pricing mode based on the average socail cost has been formed. However, China's electricity price regulation reform is lagging behind compared with developed countries. The price formation mechanism based on market for the competitive fields has not been established and effective means of price regulation for the natural monopoly fields still lack. There is a considerable distance from building market price formation mechanism and incentive regulation modes. The current price regulation mechanism can not meet the need of China's power industry development and power market construction. Therefore, there is an urgent, need to further promote the reform. Based on the above background, this dissertation chooses the price regulation reform of China's power industry as the research object. The author hopes that this research will not only play an active role in promoting the price regulation reform of China's power industry, but also provide a useful reference to other natural monopoly industries'reform.The main contents of this dissertation include the following:Firstly, government regulation theory and price regulation theory are systematically summarized. The evolution process of the government regulation theory of natural monopoly and the latest development are reviewed and a detailed analysis of the meanings, targets and patterns of price regulation are conducted, which lay a solid theoretical basis for the full text.Secondly, China's electricity price regulation reform process is analyzed comprehensively so as to provide the reality foundation for this research. The five stages of price regulation reform are reviewed which include the strict regulation period, the initial reform period, the formation period of cost-based regulation mechanism, the adjustment period and the deepening period; The current electricity price regulation structure is analyzed from both the angle of regulation subject and of regulation object. The current regulation mode is analyzed from both the perspective of tariff level and of tariff structure; then, based on the above, problems of power price regulation are identified.Thirdly, successful experiences of price regulation reform of foreign power industry are summed up and the price regulation reform paths are put forward both for the field of power production as well as sale and for the field of power transmission as well as distribution. Especially, based on factors impacting the choice of price regulation modes, the price regulation reform path of China's power transmission and distribution field is proposed which is that in the early stage, the rate of return regulation model should be established and in the long-term, incentive price regulation model should be introduced gradually.Fourthly, the issue of efficient investment of power transmission and distribution enterprises as the main regulated object under the rate of return model is analyzed systematically. The concept of "Efficient Investment" is put forward based on A-J effect and investment practices of power transmission and distribution enterprises firstly; Then, based on the single and the infinitely repeated contractual relationships between the enterprise and the regulator, the single non-cooperative dynamic game model and the infinitely repeated games one are established respectively and according to the game equilibrium outcomes, conditions on how to achieve efficient investment are derived; finally, suggestions on how to encourage enterprises to make efficient investment are proposed.Fifthly, the determination of permitted return rate level of power transmission and distribution enterprises as the main regulated object under the rate of return model is conducted in-depth study. First, the meaning of permitted return on investment and parameters under the law of the weighted average cost of capital are analyzed; then, the determination of permitted cost of equity capital of China's power transmission and distribution enterprises is studied. Through the analysis and comparison of a variety of calculation methods, and based on foreign practice of calculation of cost of equity capital as well as the status of China's capital market, the Discounted Residual Income Model is proposed for calculating the cost of equity of listed companies of China's power industry; Next, based both on standard of rate of return on net assets and on the Discounted Residual Income Model respectively, the cost of equity capital are calculated. Especially by taking35listed companies of power industry as samples,"Three-Stage" Discounted Residual Income Model is used for the first time to calculate the cost of equity capital; At last, the levels of permitted rate of return on investment of China's power transmission and distribution enterprises are estimated by means of the law of weighted average cost of capital.Sixthly, incentive price regulation reform of China's power transmission and distribution enterprises in the long term is further explored. First of all, based on the analysis of realistic environment and incentive price regulation model, the trade-off between rent extraction and efficiency under conditions of both complete information and asymmetric information are discussed. And then cost compensation rules, incentive intensity and selection recommendations of different price regulation patterns are raised; Then, the high cost of public funds, inefficient cost audit system as well as higher risk of regulatory capture are introduced into the incentive regulation model respectively, the impacts of these characteristics of China's transition economy on the incentive price regulation are analyzed and the corresponding solutions are proposed; In the end, the gradual reform ways of incentive price regulation and the corresponding price regulation patterns of China's power transmission and distribution enterprises are put forward.Finally, the related supporting measures for China's electricity price regulation reform are put forward.This dissertation contains17figures,34tables and116references.