Utilities Franchise And Government Regulation

As the natural monopoly characteristics of municipal utilities and public welfare, for a long time, it was felt that there can not be many competitive enterprises in the municipal utility, otherwise, it will cause the loss of economies of scale, great costs increasing and companies can not afford to maintain simple reproduction, and ultimately lead to harm of the public interest. Therefore, the municipal utility is a typical areas with market failure, it is impossible to play the role of the market competition mechanism. However, along with socio-economic development, especially the rapid process of urbanization forward, the utility has exceeded the limit of government fiscal funding.More importanly, because the state monopoly is lack of competition, there are poor quality, poor performance and huge losses, and other serious problems in the operation of public utilities and. Government Failure cause people to began to reflect the legitimacy and effectiveness on monopolized by the state utility, then a large-scale privatization of public utilities has began, in the process of privatization of public utilities, the way which the government awards a connotation of private organization to direct the public sale of its products or services comes to the fore privatization. However, the market failure also will exist, therefore, in the implementation of the public utility franchise must need strengthen government regulation. Only in this way can the development of public utilities and better safeguard the interests of the public. This paper's background is Chinese city gas pipeline industry practice, and try to give discuss on government regulation of public utilities .The first part is to outline utility franchise. In this section, the author is to give some of the basic issues of the utility franchise and the basis of the outline of the theory presented. In addition to the introduction and closing remarks, the article is divided into four parts.The second part is the public utility franchise mode. In this section, the author introduced six public utility franchise mode, that is, BOT model, TOT mode, a joint venture model, the direct acquisition mode, operation and maintenance mode and pure private model.The third part is utility franchise procedures. The author has discussed two questions in this part :the conclusion of the licence agreement process and the extension, the termination and change of the concession agreement.The fourth part is the government regulation of public utilities franchise system. First, the author introduced the meaning of the regulation of public utilities and the need for government regulation franchise, then focused on the analysis that a good system of government regulation should include regulation goals, regulatory institutions and regulatory system, and the main contents of regulation including price regulation system, quality and safety regulations on the protection of public participation in the regulatory system and the regulatory system ect.In all foregoing analysis, the author gave a specific analysis combing with the practice of Chinese cities pipeline gas industry. The author hopes that the adoption of such an approach can respond to the problems of many public utility franchise in the real world, and contribute to the theory and practice of government regulation on public utility franchise.