Research On Electricity On-grid Pricing Mechanisms In China

Electricity industry is fundamental to national economy. Electricity price reflects values of electricity as special merchandise. Electricity pricing is crucial not only to electricity utilities but to efficient utilization and allocation of various energy resources. Reform of electricity pricing mechanisms is the key area of electricity industry restructuring. Reasonable on-grid electricity pricing mechanisms will be beneficial to the establishment of fair investment platform and competitive environment, and to promote the continuously healthy development of the electricity industry.First, reforms of electricity industry and development of on-grid electricity pricing mechanism in China since reform and openness are reviewed and on-grid electricity pricing mechanisms in different historical stages are elaborated. Several current pricing mechanisms, namely plant specified pricing, benchmark pricing, market backward-push pricing, bidding pricing, are then introduced. After this, Benchmark pricing and coal and electricity price linkage mechanisms which are applied to on-grid electricity pricing of coal-fired generation plants are described. Problems related to the application of these two coal-fired generation plants related pricing mechanisms are focus of the thesis'. Based on analysis of application deficiencies of these two mechanisms, some improvement advices are advocated.A unified on-grid pricing mechanism, with the consideration of costs of generators and send-out projects, step options, adjustment along with technology advancement and provincial differences is proposed to replace benchmark pricing mechanism. Key problems such as standard and levels of return rate, reasonable partition of interest during the construction period are discussed in the unified on-grid pricing mechanism. A modified investment cash flows statement based estimation method of on-grid prices is proposed in the thesis. Return rate of on-grid electricity price should be adjusted dynamically according to the capital asset pricing model. Full linkage based on partition of costs, under and out of control, and simplified adjustment program are proposed to improve the current coal and electricity price linkage mechanism. Based on analysis of the effects of price index on electricity costs, combined with relationship between regulated price adjustment and price index in market-economy countries, a dynamic adjustment model in which on-grid price is bounded with PPIRMFP (Purchasing Price Index of Raw Material, Fuel and Power),CPI (Consumer Price Index) and PIIFA (Price Index of Investment in Fixed Assets) is devised. Finally, an estimation and adjustment model for on-grid electricity pricing is proposed, its effectiveness is demonstrated by a real example.