Applied Research Of The Incentive Regulation Theory In Power Grid Enterprises Of China

Since the early 1980s, many countries have implemented electricity sector reforms. Many of these reforms have unbundled generation, transmission, distribution, and retail activities of the sector and introduced competition in generation and retail. An increasing number of countries are also adopting incentive regulation to promote efficiency improvement in the natural monopoly activities- transmission and distribution.This paper mainly centralizes on the issues of insufficient incentive in our country grid enterprises regulation. Based on the theoretical analysis and empirical analysis, we researched on the grid enterprise regulation systematically. Firstly, the paper analizes the present status of the regulation on the grid enterprises. State Electricity Regulatory Commission adopts the average cost method to regulate the grid enterprise. In this way, grid enterprises tend to add capital investment but improve efficiency by technology innovation. So, it is disadvantageous to the development of the grid enterprises.Then this paper Comparative analysis the modes of regulation used by other countries. The results of analysis shows that the regulation based on performance can provide more incentive than the regulation based on return of cost. The method combines the price cap regulation and sliding scale is very reasonable. Based on the research above mentioned, we adopt the incentive regulation theory and principal-agent theory to research the regulation of our country grid enterprises. The results of the research show that when regulate the grid enterprises trade-off between information rent and incentive degree be considered, the main work faced by grid enterprises should be considered too. State Electricity Regulatory Commission should relax regulation, strengthen the regulation of power grid security, introducing incentive regulation gradually.According to the analyses, we design a growing power regulation model ,which combines yardstick competition and benchmarking technique, considering the service quality,grid development and so on. Thus, this paper introduces the method of parameters definition.Finally, this paper discusses the determination of X included in the regulatory model. The paper adopts the benchmarking method based on the Malmquist index, combining the price regulation and transmission service quality effectively to achieve cost reduction incentive and service quality effective investment in a reasonable balance. That is to say, in the price cap regulation model including the index of service quality regulation, the regulated regulation theory. After the Malmquist index is determinated, we can further determine the value of X.