A Study On China's Coal And Electricity Price Linkage Problem And Countermeasures

Coal industry and electrical industry are the essential basic industries and energy industries to the economic and social development of our country. As two of the most relevant and interdependent industries in the supply chain, theese two industries should be very close to each other, and develop harmoniously. But, in reality, these two industries are unable to achieve a win-win situation and have stuck in a stalemate for a long time because of the lack of effective coordinate mechanisms and electricity prices. "Top Cow" phenomenon is being seen more and more between these two industries. As a result, this situation cause local areas in short of electricity supply, and it affected our country's economic and social harmony. And it also affected the healthy development of the coal, electricity industry. It is the constraints of the current bottleneck in China's economic development now.To straighten out the coal, electricity price relations and to promote that the coal and electric power industries could develop in a comprehensive, coordinated, sustainable situation, National Development and Reform Commission introduced a coal-fired electricity price linkage policy in May 15,2004. The policy is designed to optimize the allocation of resources and guide investment in electricity, and it aims to achieve after bidding in accordance with market supply and demand of electricity and coal lay the foundation for the market quotation. However, after twice application of the price linkage between the coal and electricity industries, due to the defects reflected in the policy itself, and the difficulties met in the process of execution of the policy, the third price linkage has been delayed. The reasons for the problems of the price linkage are the long-run contradiction between the "coal and coal market plans","market of coal and electricity".Despite the application of such price linkage, the problem cannot yet be overcomed. In this paper, the author suggests that in order to solve the problems, the mercerization reform must be accelerated, especially in terms of the price reformation. In addition, the electrical online prices should be given much more autonomy on the basis of the coal prices, and speed up the implement the linkage between sales price and the market price. So that the prices reflect the actual changes of market supply and demand, and the resource scarcity, make full play of their price in electric power resource allocation. This is the basic role of the symptoms. However, the mercerization reform cannot be finished at one step. It is of great difficulty to realize the full liberalized access to realize the price due to various factors and restriction. Our government should play the leading role during this process of reformation. The importance of the price linkage cannot be overestimated, but it needs to be perfected, while the advantages being expanded, and disadvantages reduced. Besides, the flexibility, mobility and continuity of the price linkage should be ensured. At the same time, we should adjust the industrial structure, promote the amalgamation between these two industries, and establish the relevant coal and electrical future markets, and promote market price hearings auxiliary measures, etc. All of these factors are the index of the existing problem in the development of these two industries. Only the price of the price linkage problems be solved, the sustainable development of the coal and electrical industries can be realized. and then make due contributions to the social and economic development of the whole nation.