National Development and Reform Commission will promote a new round of power reform and focus on direct power purchasing.

 

Source: Chinese Radio Network, People.com.cn, Financial Report of the 21st Century, cnstock.com

Author:

Date: 2013.9.30

According to World Business of China Business Radio, some media report that National Development and Reform Commission will promote a new round of power reform, aiming at breaking the pattern of the high-degree concentrated grid industrial chain. According to the report, China will push direct power purchasing, and finally promote the transformation of grid companies into the utility-service-oriented enterprises, through reforming on the trading right of power grid. Therefore, whether the power reform guided by such idea can promote the marketization of grid chain? Let’s listen to the comment of Jing Chunmei, expert with China International Center for Economic and Technical Exchanges.

 Host: Jing Chunmei is the Doctor in economics of the graduate school of Chinese Academy of Social Sciences. She is the deputy researcher of China International Center for Economic and Technical Exchanges and energy expert in China. Her research fields include energy economy and macro economy.

 Host: Good morning, Mrs. Jing. According to the media report, the new round of power reform will revolute the trading right of power grid, promote direct power purchasing and separate the power selling link from the power grid. Will this method be able to change the pattern of high-degree concentrated power grid?

 

Jing Chunmei: The structure of power industry chain currently is consisted of power generation, power transmission, power distribution and power selling. The power reform launched in 2002 has separated power plants and power generation from power grid. Currently, power transmission, distribution and selling are integrated together, and the power grid is responsible for power distribution and selling. Therefore, from the perspective of industrial organization and structure, the power industry is highly centralized, the defect is that enterprises and users can’t meet with each other face to face; instead, they have to communicate mutually by the grid; just as when we are buying things, we can’t bargain directly with the seller but through an intermediary, the grid, which earn the purchase and sale price differentials; in the future, the grid shall become a professional company specialized in power transmission, just like the toll station on the highway, which shall collect the toll according to the power it transmits instead of power trading. It shall be the power generation enterprises and power users who are talking about the transaction of power. Therefore, if the next-step reform can be able to change the transaction way of power, then the power market will be formed.

Host: What influences will this reform bring about to the power industry and consumers?

Jing Chunmei: According to this reform idea, enterprises of power grid will be changed into utility enterprises, with their original profit model changed. Without power transaction, the grid enterprises will better focus on power transmission, and become more professional power distribution companies; consequently, power users and power enterprises will have bigger right of choice, and this will be to the benefit of power industry to promote its operation efficiency, and to the benefit of the promotion and application of new energy as well as energy saving and emission reduction.

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