Encouragement Regulation Choice Research Based On Power Industry

Power industry is considered to be traditional monopolized industry. Lack of competition and inadequate encouragement produced by traditional regulations lead to low industry efficiency and loss of social welfare and bring about the so-called regulation malfunction. Since 1980s, power industry market reform has taken place in many countries. In power industry, market mechanism is introduced. Through the adoption of relevant encouragement regulations measures to encourage competition and the introduction of investment to conduct re-allocation and use of the resources of power industry, the allocation efficiency and production operation efficiency of power fundamental resources is improved, thus to some extent, social welfare is improved.The power industry in China is now in the investment absorption stage. The power supervision of the advanced countries is conducted under the precondition that the supply is bigger than the requirement, whereas in China, as we are a developing country, our economic development is in the middle period of industrialization, we rely much more on energy sources for our economic development than the advanced countries. Our power requirement is ever-increasing and the supply cannot meet the requirement, thus the contradiction is obvious. Power companies in China have low production operation efficiency, which needs to be improved urgently. Therefore, in the fields of power regulations, we should overcome the disadvantage of information dissymmetry which existed in traditional price supervision model and introduce the encouragement regulations suitable for the development of our power industry in order to promote the development of power market in China.The essay conducts deep and systematic research on the encouragement regulations for power industry, centering on the current condition of power industry development in China, the degree of monopolized competition for the industry and the low production operation efficiency. The essay points out that for the problem of encouragement inadequacy for power industry regulations, under the profit rate regulations model, power companies tend to increase capital investment instead of technological innovation to improve efficiency, therefore, it is not favorable for development. Some encouragement regulations models widely used in advanced countries nowadays are compared and analyzed, including price upper limit regulations and its derived income upper limit regulations, domain rod competition domain rod competition regulations etc. Through the research on the direction of the encouragement regulations for power industry in China, the results are:We suggest that combination of price upper limit and profit rate regulations model should be balanced at the current development stage for power industry. In the near future, with the basic completion of infrastructure investment for power industry and the non-obvious contradiction of supply and requirement, it is very essential to introduce gradually some intensive encouragement regualtions, such as authorized management right competitive bidding and domain rod competition competition. We can also choose some fields which have the conditions of domain rod competition to try domain rod competition regulations model.Through the choice and reform of encouragement regulation for power industry, the problem of low production operation efficiency can be improved further. On the national layer, industry efficiency should be improved to economize on energy sources; On the people's livelihood layer, social welfare should be increased to contribute to the modernization construction of China.