Research On The Legal Mechanisms Of The Power Industry Competition

Based on the production, transmission and sale of electricity, the power industry is an important part of public utilities and also the basis for national economic and social development. Because of economic, political, technological and other reasons, most countries have traditionally adopted the vertically integrated monopolistic business model in the power industry,which is subject to strict government control. However, this business model can bring about the highly politicized investment, inefficiency of technology, construction and maintenance, difficulties of regulation and pricing, and other defects. Therefore, in order to improve efficiency, promote technological progress and improve consumer welfare, Chile, England and other countries began the market-oriented reform to introduce competitive mechanisms in the power industry since 1970s, and this reform has been in the ascendant on a global scale. Following the world trend, China also began the reform in the power industry in 2002.Under this background,this paper deals with major and special legal issues arising from the introduction of competition mechanisms to the power industry and the operation of competition mechanisms. In addition to the introduction and afterword, the paper is divided into two parts, a total of six chapters. The pandect part, including ChaptersⅠandⅡ,mainly discusses the legitimacy and legal response of the introduction of competition mechanisms to the power industry. The subsection part, including ChaptersⅢ,Ⅳ,ⅤandⅥ,principally deals with specific legal structure of competition mechanisms in the power industry. In accordance with relevant theories,ChapterⅢconstructs competitive and monopolistic market subjects in the power industry that not only promote competition,but also increase efficiency. ChapterⅣresearches the legal control of unfair trade practices of diverse competitive market subjects. ChapterⅤmainly studies the legal control of fair and open conducts of transmission and distribution power grid monopoly operators. ChapterⅥprimarily discusses the legal responsibilities and their accountability mechanisms of illegal competitions of aforementioned subjects.ChapterⅠ,from monopoly operation to introduction of competition mechanisms:the development trend of power industry.Firstly, this chapter analyzes the causes and problems of vertically integrated monopolistic business in the traditional power industry,which is the common result of economic,technological,political,social and other reasons;however, this monopoly has brought inefficiencies,impediment of technological progress,social welfare losses and other disadvantages. In order to overcome these disadvantages, countries around the world,one after another, give up the traditional business model of the power industry in favor of competition mechanisms.Secondly,this chapter studies empirically the competition mechanisms introduced into more typical nations,such as Chile, the United Kingdom, the United States, Japan and China;and finally,proceeds with the theoretical and realistic backgrounds. The former mainly includes recent advances of natural monopoly theories, regulation failure and competitive market theories, The latter principally includes electricity technological advances and information technology revolution, the expansion of electricity demands, the governments’political needs, as well as demonstration effects of related fields and areas.ChapterⅡ, from competition mechanisms to competition legal mechanisms:the safeguard measures of electric power industry reform and development.Firstly,this chapter analyzes the relationship between competition mechanisms and legal competition mechanisms,pointing out that the competition mechanisms possess elimination,guidance and innovation functions, but at the same time, are also difficult to overcome the blindness of their own, easily lead to monopolies and unfair competition practices.By taking advantage of its creation and suppression roles,the law will enable competition mechanisms to play their due functions. Secodly,this chapter discusses the efficiency, equity, security and order pursued by competition law mechanisms in order to provide value guidelines for building specific mechanisms of competition law.Finally, conducts preliminary construction of the internal logic system of competition legal mechanisms of the power industry.This paper argues that competition legal mechanisms should be an organic whole, including the shaping of market players,legal control of their practices, legal responsibilities and their accountabilities for illegal competition practices.ChapterⅢ,shaping power industry market players.This chapter tries to resolve the problem of transition from monopolistic business entities of national vertically integrated power industry to competitive market entities,and further constructs the power industry market players adapt to competitive mechanisms. In particular, firstly, the chapter bases the structure of the power industry market players on the Bell doctrine and workable competition theory,putting forward a viewpoint that China’s structure should be a wide range of market players in the power generation and electricity sales sectors and monopolistic business entities in the transmission and distribution grids.Secondly, reshapes the subject property of the power industry according to the theories of property rights, putting out a specific path and methods to reshape the property of China’s power industry on the basis of the analysis of the reasons and main problems of China’s traditional state-owned property dominant model.Finally, from the point of view of rights and responsibilities configuration of power industry market players,this chapter also discusses special legal issues in shaping power industry market players,which include the establishment of restrictions on cross-operating system, legal system of stranded cost recovery and universal service.ChaptersⅣ, legal mechanisms for multi_ competitors’ fair trade practices in power industry. This chapter points out that price and information are the major factors in restricting fair power trade,and analyses the legal control of the market power of competitors in power industry, price discrimination and power transactions information; and then, aiming at the problems in China’s current relevant legislation, proposes the specific improvement recommendations.ChaptersⅤ, fair and open legal mechanisms for monopolistic business entities of transmission and distribution grids. This chapter first puts out that the theoretical bases for them are the essential facility doctrine and infrastructure theory;and then, according to the two theories,gives a detailed analysis of the anti-monopoly law path and the electricity law path that are the two selective legal paths of fairness and openness in the transmission and distribution grids around the world,arguing that China should choose the electricity law path supplemented by the anti-monopoly law. Besides, this chapter reconstructs the mandatory contracting system and pricing system which are the two basic legal systems controlling on monopolistic business entities’fair and open practices.ChapterⅥ, law responsibilities and their accountabilities mechanisms of power industry market players’ illegal competitions. ChaptersⅣandⅤresearches the legal control of competitive and monopolistic subjects’ competition and trade practices according to their respective different behavioral characteristics from a positive start, whereas this chapter explores legal control of their illegal competitions from the opposite side. Firstly this chapter gives an overview of particular performance of the two kinds of subjects’ illegal competitions,secondly analyzes the civil, administrative and criminal liabilities that should be borne by them,and further puts forward legislative proposals to improve legal liabilities of illegal competitions in China’s power industry after comparative analysis of liabilities legislations for illegal competitions in countries and regions of the world. This chapter concludes with analysis of two modes of legal responsibility investigation systems in countries and regions of the world,that is, justice-led and the executive-led models.Combined with the national conditions, China should make use of the executive-led model, in the light of which,this chapter gives brief discussion on modle of executive power arrangement.