The Research On Benchmark For Electricity Transmission And Distribution Price Method

Due to the special status of the transmission and distribution network in the powersystem as well as it’s strong natural monopoly attributes, making the development of rationaltransmission and distribution price to become the focus of the electricity reform. Reasonableelectricity transmission and distribution price is not only able to promote fair competition inthe electricity market, but also related to the power grid efficiency, sustainable developmentand the coordinated development of the entire power industry. Although China’s power gridcompanies are separated with power plants, there is no independent and reasonableformation mechanism of transmission and distribution price in China. This situation is laggingbehind the pace of reform of China’s electric power system reform, even prevent a deepeningof the power reform. Therefore, to determine independent electricity transmission anddistribution is imminent. Grid has a natural monopoly characteristic, the monopoly will causethe failure of market mechanisms, transmission and distribution price must be developedthrough government regulation, which is the consensus reached in the world of theory andpractice. However, due to the different conditions of each country, the electric power industryreform process vary widely, the enactment of the national electricity transmission anddistribution price is different.This article is based on research results at home and abroad, using the theory of controlof economic and cost accounting to establish a benchmark electricity transmission anddistribution price model under the status quo of China’s tariff system. First, this article offer acomparative analysis of the existing regulatory model, such as service costs and return oninvestment, price caps, revenue caps, yardstick competition model. Developing acomprehensive benchmark price control mode which is combined with ROI model andyardstick competition mode under the status quo of China’s electricity transmission anddistribution price. To develop benchmark electricity transmission and distribution needs twostages. Early stage of implementation, we introduce competition through establishedperformance benchmark to narrow the difference in efficiency between the power grid enterprises. In this way we may create the preconditions for the implementation of the secondphase of the benchmark electricity transmission and distribution. Then this article classifiedChina’s power grid enterprises by the factors affect the cost, the benchmark cost of similarpower grid enterprises using the same average level as the standard. Finally, this articlecalculate the benchmark for the cost of each grid enterprises accounted separately by differentcharacteristics of the cost, then plus a reasonable income and taxes to develop a benchmarkprice for electricity transmission and distribution.