The State Council has approved a radical reform of the State Power Corporation, which holds a near-monopoly on electricity generation and distribution, in order to spur competition within the industry, South China Morning Post said. The reform, proposed by the State Development Planning Commission, involves splitting generation from distribution, restructuring assets, setting up bidding systems for electricity prices and introducing regional power markets. It is expected to be completed later this year.
After State Power has been reorganised into two arms – generation and distribution – its generation assets will be restructured into three or four independent national power producers. This will facilitate the introduction of a power pooling system in which the power producers supply electricity to a grid in competition with each other. Power pooling trials have been conducted in six provinces, including Shandong and Shanghai, over the past couple of years. The corporation’s distribution assets will be restructured into two regionally based vehicles, National Power Distribution and Southern Power Distribution.
New regulatory bodies will be established to supervise the working of the new system, according to a separate article in Wen Wei Po. The State Power Regulatory Commission, reporting directly to the State Council, will be responsible for supervising the power industry nationwide. Under its leadership, regional and provincial regulatory organs will be formed. The regional bodies will implement state power policy and oversee the trans-provincial power market, while the provincial bodies will supervise their own power sectors. Funding for the commission will come from charges collected from power enterprises.