Elsevier

Energy Policy

Volume 34, Issue 16, November 2006, Pages 2455-2465
Energy Policy

The reform of electricity power sector in the PR of China

https://doi.org/10.1016/j.enpol.2004.08.040Get rights and content

Abstract

Deregulation was launched as a concept in the United States more than a decade ago; the European Union Commission has also formally announced that electric deregulation must be completed by the end of 2005. Deregulation or reform has already been a popular topic on the Electricity Power Sector. This paper will discuss the restructuring and regulatory reforms in the PR China's power sector. It begins with a discussion of the characteristics of electricity reform or deregulation in other countries, including the US, the United Kingdom, and so on. It will be followed by the industry structure and regulatory framework that characterized China's power industry during the latter part of the 20th century and the history of China's reform to restructure the power industry to competitive suppliers of generating services in recent years. It discusses the role of the State Power Corporation in the reform and gives a detailed description of the latest electricity reform in the year 2002. The paper concludes with some thoughts regarding future challenges and trends on the reform for China's power sector.

Section snippets

Background

China dismantled the State Power Corporation on December 29, 2002 and set up 11 new companies in a move to end the corporation's monopoly of the power industry. The former State Power Corporation owned 46% of the country's electricity generation assets and 90% of the electricity supply assets.

The new companies include two power grid operators, namely the State Power Grid and China South Power Grid. Each of the five electricity generation companies own less than 20% of China's market. They will

Power industry regulatory systems: past and new trends

At the beginning of the 20th century, the American power industry was dominated by privately owned public power utilities with increasing vertically integrated management. These corporations controlled the power generation, transmission, and distribution markets. In brief, they developed a kind of monopoly in a “monopolized franchise sector.” In 1916, America established governmental regulatory agencies in its 33 states that supervised the public power utilities, issued franchise rights,

China's power regulatory system— the history of China's reform for the power industry

Most countries in the world have chosen to improve the efficiency of their power industries over the past 20 years, generally through deregulating and restructuring and thereby lowering power prices. Such market-oriented reform has tended to promote the integral economic competency of the power industry. In China, the power industry has gone through a series of changes since 1985, including: the termination of the monopoly of “exclusive investment in power generation,” which existed for over 30

Conclusion and future challenges in reform

Transition from a vertically integrated industry to a competitive and deregulated industry will be a long and complicated process. For this reason, power sector reforms in China should be implemented one-step at a time. The process should be divided into three phases:

Phase1: Separate power plants from transmission grids, establish transmission companies, and construct a competitive generation market;

Phase 2: Separate distribution from transmission, provide transmission networks open access to

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