Study On Government Regulation Of Chinese Electricity Industry During The Marketization Proceeding

The electricity industry was always considered as a natural monopoly industry because of huge investment, expert capital and scale economy and government in many countries regulates electricity industry strictly. But the progress in technology and economy leads the loss of the reasons in regulation. At the same time, the result of regulation runs counter to its original intentions because of the lack of competition and incentive especially. Many economists researched it broadly, and Incentive Regulation Theory, Contestable Market Theory and New Natural Monopoly Theory are grown. The knowledge on natural monopoly, competition and the government regulation are changing. More and more economists believe that the government should deregulate and introduce competition in order to restrain monopoly, to improve efficiency and to increase social welfare if the conditions had grown. Market is popular in the world electricity industry since 1980s. At present, the reform in Chinese electricity industry, the regulated degree and the means for Chinese power market are exploring. Firstly, on the basis of analysis for development of Government Regulation Theory and the application in the power market, the paper analyzes the evolvement in government regulation in the electricity industry, the problems of it and the development trend of this industry, then, analyzes the effective measures for Chinese electricity power market respectively from the market admittance, the price, the protection of environment and the service quality, etc. Specially, the paper analyses the performance in government monopoly and division in admittance, analyses respectively the performance of Price?Cap?Regulation and Rate of Return from incentive, invest and manipulation etc. Then it analyses the performance in environment regulation with negative externalities in environment from thermal plant. Secondly, the paper brings forward franchise bidding and auction as the means for the admittance, then it builds some regulation models which be incentive as well as can be feedback the changes in demand. Finally, the paper studies the realization in competitive equality among the electricity enterprises in the interim of market reform and the rebuilding in government regulation, at the same time, the paper studies the regulation policies for Chinese power market according to the analysis above.