Analysis Of Institutional Change Of Electricity Regulation System Of China

The electricity industry is the basic industry which is closely associated with the nation's economy and the people's livelihood. It was always considered as a natural monopoly industry because of huge investment, expert capital and scale economy. Most countries in the world basically adopt state-owned and the vertical monopoly operation pattern of longitudinally integrating electricity generation, transmission, distribution and selling, and regulate electricity industry strictly. However, with the changes in technology and economic conditions, it has been weakening that the characteristics of natural monopoly in some links in the electricity industry, so it is not sufficient for the economic reasons of these monopoly operations. At the same time, lack of competition and encouragement caused by the traditional regulation makes the industry to be in low efficiency and the loss of consumers' welfare so that the regulation becomes vacant. For this reason, economists do many researches and have established theory of incentive regulatory, theory of contestable markets, theory of modern natural monopoly and so on. People's view to natural monopoly, competition and their relationship with government regulation also has changed. More and more economists believe that as soon as the conditions are perfect, government should loosen regulation, introduce competition mechanism and restrict monopoly by market competitiveness so as to improve efficiency and increase society welfare. Meanwhile, the development of information technology such as computer, internet communication also can support the fair, just, open competition of electricity market and safe, stable, quality, economy operation of power network. So conditions are basic ripe to loosen regulation and introduce competition.In 1980s, some countries represented by UK, America and Australia began the structural reorganization and market reform by splitting-up horizontally and vertically, introducing competition in the links of electricity generating and selling while establishing independent, unified and authoritative electricity regulation agency, intensifying the regulation in the noncompetitive links in the electricity market. These reforms have played an important role in improving efficiency of resources distribution, lowering costs and prices, enhancing service quality, boosting power industry development, etc.The new marketing reform in Chinese electricity industry began in 2002. After five years the expected goals has not been realized because of all kinds of reasons .The reforming lately of electricity industry regulation system of our country is one of the important reasons.Although referring to the international advanced electricity regulation experience, our country has set up independent electricity regulation agency-State Electricity Regulatory Commission People' Republic of China (SERC). The relatively independent electricity regulation system has been built initially. Because of the gradualness of the electricity system reform and the influence of the department's interest, the reforming of electricity regulation system of our country was very slowly. It is concentrically embodied in existing legislative lag, disperse, vacant and misplaced regulation functions, imperfect organizational system of SERC and the backward regulation ways etc. institutional disfigurements.This paper is to research referencing advanced electricity regulation pattern and experience based on the background of marketing reform in Chinese electricity industry. It puts forward the suggestions of improving Chinese modern electricity regulation system in improving electricity legal system, perfecting functions of SERC, Sounding organizational system of SERC, improving the ways of regulation. It has great theoretical and practical significance for the reform of China's power marketing during the "11th Five-Year Plan" period.This paper mainly applies natural monopoly theory, public interests theory in economics of regulation, the slave theory of regulation, theory of incentive regulatory, the theory of institutional change, adopting empirical analysis combined with normative analysis, historical analysis combined with compared analysis.