The Research Of Shanghai Water Supply Pricing Regulation Policy

Water industry as utilities, related to social basic interests of the generalpublic, which has a natural monopoly, quasi-public and public welfare andother characteristics, determine if the price of water is formed entirely throughthe market, it will seriously affect the social public welfare. The main objectiveis the maximization of the social welfare of the regulation for water industryprices. It will be achieved the pursuit efficiency and fairness and to take intoaccount economic, environmental and social aspects of the benefits.Although the government has been intervened and regulated for the waterprice, the management systems for water supply industry in Shanghai has notyet formed completely. It also didn’t clear theories on the price formation,adjustment and changes and institutional framework. There are many problemsfor the management systems of water supply industry. For instance, there is thecost of going is not in place, the cost to overestimate the phenomenon is seriousand the consumer surplus to certain extent damage. Price control method is moresingle and classification of price system is not scientific, special low-incomegroups have not been effectively protected at the same time. In addition, the lowefficiency of enterprises operation model, management model and investment model will reduce the social welfare. Finally, the price structure is not complete,the sustainable development of the industry has encountered a problem and aseries of bottleneck.This paper analyzes the water price regulation policy and current situationfrom UK/USA/France/Japan and some domestic cities such as Hong Kong andShenzhen. These governments implement macro-management for water pricesbasically depends on the specialized institutions of government departmentssuch as UK office of water services Bureau and Japan government bureau ofwaterworks. These departments develop means of price limits austerity toimplement macro-control. The water prices are subject to cost recovery as theprimary basis for the development. At the same time, the price management willbe implemented of dynamic adjustment depends on market demand, economicsituation and investment. Through government investment compensations, someproblems of funds are solved for investment projects in a certain extent throughgovernment investment compensation. On the other hand, the mechanisms needto establish supervision and restraint completely, imposing strict water supplyorganization disclosure and reporting obligations.This paper presents mainly some ideas for regulations of water supply price.Firstly, it will be established the innovation cost pricing model. Secondly, theprice structure regulations are reformed and to formulate the price classificationsystem. Thirdly, the mechanism of government compensation is needed toimprove. Fourthly, the function of a comprehensive price control mechanism is established. Finally, the evaluation systems for supply costs and constraintsregulatory mechanism are also needed to establish.