In late January, the State Council approved the establishment of the National Energy Commission (NEC), a "super-ministry" led by Premier Wen Jiabao and Vice Premier Li Keqiang. It had been a long time coming: The National People’s Congress approved its formation in March 2008.
Observers say it’s too early to tell what the new body will mean for energy policy. After all, the creation the National Energy Administration (NEA) in 2008, also expected to speed the pace of reform, did not have a noticeable effect.
Power tariff reform, which in 2008 was seen as one of the key tasks of an energy super-ministry, is not likely to be a short-term goal. By passing more of the true cost of electricity on to end-users, reform would inevitably lead to rate hikes, something Beijing is keen to avoid for now.
"The government’s focus on pre-empting inflation suggests that an electricity tariff hike is unlikely in the near-term," Jing Ulrich, chairman of China equities and commodities at J.P. Morgan, wrote in a recent note.
In the nuclear sphere, however, it appears that the NEC will continue a process of slow reform that existed under the NEA. Daniel Money, a project manager at the Nicobar Group, which advises foreign nuclear firms in China, said the expansion of the number of licensed nuclear owners and operators is a sign of progress.
Even if it doesn’t prompt dramatic reform, the NEC will have the important job of policing investment in nuclear capacity, said Arnaud Lefevre-Baril, managing director in Beijing of Dynabond Powertech, a nuclear industry consultancy.
"Basically a nuclear power plant is a cash machine … The NEC will have the same issue as the NEA, to control the new entrants like Datang (0991.HK, 601991.SH) and Huaneng (HNP.NYSE, 0902.HK, 600011.SH), to make sure they do not over-invest in nuclear," he said.