Regulation Analysis About Electric Power Industry Of China

The electric power industry as a pillar industry of national economy.It plays an important role in various aspects.Such as, industrial and agricultural production, living, technology R&D and public entertainment and other fields.There is no doubt that there is no electricity, there is no modern civilization,and our diverse life.The technological revolution driven by power made outstanding contributions for progress of human civilization.With irreplaceable status of the power in the economic life,we have gradually realized that some inherent property of the power industry as a basic industry.The electric power industry consists of four links generating,transmission,distribution and selling,which are undivided,from the generating to the selling as a whole process. In this vertical system, transmission and distribution have the property of natural monopoly,and transmission is stronger than distribution. Natural monopoly is the most prominent characteristics of the electric power industry. Electricity generation and sale aspects are belong to non-natural monopoly aspect in nature.Transmission and distribution aspects come into being natural monopoly,mainly due to economies of scale. As we all know, the construction of transmission and distribution network required a lot of pre-investment, not a few individuals or enterprises can achieve,therefore,are often required of the country in the form of fiscal expenditure to build power grid.Because of this, the grid is with large sunk costs. If build two or more parallel power grids in the same geographical area,firstly it's great waste of resources and inconvenient management;input costs remain unchanged, with the increase of users and electricity demand, then the price of per unit electricity product will drop,it is economies of scale.In addition,the power product owns the nature of quasi-public goods, consumption of electricity at a certain range, power product is public goods, any person has the right to use;When exceed this range,there will be a "plus price" which in turn to be the characteristics of general merchandise,in line with the requirements of the laws of the market.So electricity is special merchandise.The aspect of generating is entirely different from transmission and distribution. In order to improve productivity,save resources and increase social welfare, competition should be introduced in power generation,power generation companies have a number of common access to market.The implementation of the survival of the fittest,which rules the market.Bidding to break the previous traditional model of vertical generation-transmission-distribution.So that the lowest cost,most competitive manufacturers of power generation can be retained;At the same time, the major consumers could make an agreement with electricity generation manufacturers, so that customers have the initiative in the market and further more mobilize the enthusiasm of the production companies.In fact,the electric power industry regulation is necessary to distinguish between natural monopoly and non-natural monopoly. Natural monopoly aspect should be regulated by effective method,non-natural monopoly aspect should be introduced competition to promote the development of whole industry healthy and stable.Implement effective monitoring and regulation of power industry is the purpose of writing this article.Regulation theory is divided into four main stages of development:the public interest theory of regulation,regulatory capture theory,the theory of contestable markets and incentive theory of regulation.Analysis of electric power industry regulation based on incentive theory of regulation,through regulating the electricity product price,the business of electricity industry will be, standardization and ordering. Incentive regulation theory is based on government and business information asymmetry.Because of the existence of inefficient and non-economic,regulation is required,but the Government does not know all the circumstances about enterprises. In this case,the theory of incentive regulation should be used.While the core idea is to minimize the regulation cost of government,on this premise,enterprise could reduce product cost,through the internal management and technological innovation.Then consumers benefit from it and ultimately achieve effective competition.In this paper, the innovation lies on the fact that analyze regulation problem from the perspective of more comprehensive. Broke the previous regulation mode on the issue of electric power industry, only particularly emphasis on some course. All acts must have a legal basis.Government regulation and supervision must be on legal basis;operating and production of enterprises should take law as the foundation,the legislature first and act in the post.Which could reduce the unnecessary cost maximumly.Such as the electric power industry is now facing the problem of environmental pollution, on the one hand, we should actively develop new green energy to replace the traditional mode.Further more,strengthen the legislative building,which is the most effective way to protect the environment under the present conditions;on supervision aspect,regulatory body must be unambiguous about its legal power and status on law.Authority recognized by laws and regulations,so that the function of regulatory body is definited.Regulatory body must have sufficient legal basis when line of duty. In short, regulation is a question of economic and legal issues,they are indispensable.Actively learn from successful regulatory experience of electric power industry of developed countries will help us process less detours to minimize unnecessary costs and time invest in the reform. Most representative is the United States, Britain and France's electrcity industry regulatory reform. We can see that:the importance of legislative and regulatory;to break aspect of non-natural monopoly and introduce competition;the government played a very important and positive role of "promoting"in the reform process.These elements are indispensable,cast the result of their success. Reason to believe that the reform of China is bound to "Successors excel the predecessors" to achieve greater results.Finally,in response to the regulatory reform problems of China,give some corresponding policy recommendations:improve and consummate the existing legal system,regulate the conduct of the government and enterprises by developing new laws and regulations;consummate the pricing mechanism,the implementation of two-tariff electricity costs and benefits of the product can reasonably be linked;further more opening up the existing electricity generation and sale markets to form the healthy market operation mode,so that electricity consumers have more choices of space and access to quality services;the development of "green power" as a long-term development plan, not only because of its economic benefits are good, but also because it is the key question to solve environmental problems,energy problems and sustainable development of the future. Hoped that in future,whether in studies or on capital investment should be tilted to the green energy.