On the spectrum of market determined to government controlled, the price of electricity dictates the supply. Since the government controls the price of electricity in China, power shortages are frequent. Electricity supply shortages reduce economic output, thus depressing GDP and standards of living. The disequilibrium between supply and demand is the context in which China has pursued regulatory restructuring and market reforms over the past 30 years. China currently employs an electricity-pricing schema that has evolved from beneficial facets of previous reforms. The retail power price is determined via a process of adding on-grid prices, T&D charges, taxes, and surcharges. The various components of electricity pricing are published as benchmarks by the NDRC on a province-by-province level. The provinces, in turn, make further adjustments to the price, which may or may not undermine State authority. This paper provides an overview of China’s current and historic electricity regulatory and market reforms. An analysis of the trends identifies that further restructuring is likely to promote competition in order to restore equilibrium between supply and demand. In this event the price of electricity will rise in the short-run to promote investments in clean energy and efficiency. In the long-run supply and demand will balance as markets perform more efficiently. Key
CITATION STYLE
Edwards, T. J. (2012). China’s Power Sector Restructuring and Electricity Price Reforms. BICCS Asia Paper, 6(2), 1–30. Retrieved from http://www.vub.ac.be/biccs/site/assets/files/apapers/Asia papers/201201 - Edwards - Electricity Pricing.pdf
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