Study Of The Power Industry In China Market And Its Regulation

Electric utility industries which involve national economy and the people's livelihood are the economic lifelines of a country. In the whole world it has become a common way to reform the electric utility industry so as to reduce the price, increase economic efficiency and make the goods more competitive. Since the 1980s we have reformed the electric utility industry according to the guideline that is to separate enterprise from administration, introduce competition, regulate the industry and reorganize the electric enterprises .Although the reform makes considerable headway, there are still some problems. If the goal of the reform was to promote the development and resolve the funds shortage in the past, nowadays the reform needs to settle the double problems of efficiency and development.For a long time because the electric utility industries have some special features, the vertical integration monopoly industrial organization forms are generally adopted. But with the technology advance and the deeper understanding about the electric utility industriy, the nature monopoly has attenuated. Except that the transmit electricity and power distribution still are monopoly, electric power generation and sale don't belong to monopoly and are appropriate for competition. The methods of the market orientation reform in the electric utility industries mainly include three types. Firstly the vertical integration monopoly industrial organization forms continue to keep up, but new entree will be permitted to use the monopoly enterprises' electrified wire netting according to the regulated price so as to provide the competitive service. Secondly the original vertical integration monopoly enterprises are separated according the monopoly and competitive segment. While the monopoly segments are still strictly regulated, competitive ones can use the monopoly netting on an equal basis. Thirdly not only the original vertical integration monopoly enterprises are separated according the second methods, but also these monopoly enterprises will be continued to separate laterally. In fact we choose the second model.Nowadays there are some problems in the market orientation reform of the electric utility industries. Firstly the newly-built electric utility enterprises still retain the state ownership, which hinders the transformation of the management and administration and the formation of cooperation governance. Secondly the electric power's price is determined with the plan economics' method rather than theregulation model. Thirdly the structure of the electric power's price is not fully reasonable, which results in the low efficiency of recourse allocation. Fourthly there are the cross subsidy in the electric price. Finally the summit and nadir electric prices are not reasonable, which doesn' t give the rein to the market.Therefore, the orientation of intensifying electric system reform should be competition instead of monopoly and market instead of central plan. The important measures include: Firstly, make further efforts on introducing competition into electric generation and sales. Only separating generation and transportation, competing in the generation price can not structure a real competitive electric market, and separating transportation and distribution, separating distribution and sales is also necessary. Secondly, deepen electric price reform and rationalize pricing system. The price of generation is determined by market in order to facilitate effective competition. The prices of transportation and distribution are regulated by the government and determined independently. The price of sales is regulated by the government and oriented by the market so as to form appropriate competition. In the meanwhile, establish the effective stimulation system of investment. Generation should be market stimulating taking over policy stimulating. Transportation and distribution price should be regulated according to returns on investment, thus electric corporation operating smoothly and transportation developing fast. In addition, improve the summit and nadir electric pricing system. Thirdly, carry out the electric corporation property rights system reform.In the process of the market orientation reform in the electric industry, we must remember that some segments of electric industry still contain nature monopoly in the condition of the technology and economic. Markets don't result in the optimal recourses allocation voluntarily, and it needs the intervene of government. However, the methods of the intervene need transform the traditional administration into the regulation based transparent rule which does its work according the principles of justice, transparent ion, profession, independence, honesty and accounting. Now it is the most urgent reform task to improve and perfect the organization and function of electricity regulatory commission.