The Two-part Tariff Competitive Bidding Mechanism Of Electricity Price In China

As the economy continues to grow, Power supply in china is unable to meet the electricity needs of industrial production and residents, so during peak periods it emerged out of power cuts phenomenon throughout the country. "Power Scarcity" frequently alarms, and it seriously affected our production and business activities and the normal life of residents, also seriously hampered economic development. The remission of the "power shortage" can be achieved through the number mechanism and the price mechanism, while the number of mechanisms often can not play a role at the regulation of electricity supply and demand relationship, because the electric power construction period is too long. At present the existing power price formation mechanism is seriously distorted, it is difficult to promptly resolve the power imbalance between supply and demand. Therefore, the reform of the existing irrational price formation mechanism become a top priority, however the key of the reform is to establish a scientific and reasonable power onto-grid price formation mechanism. This is the purpose and significance of this paper.This paper first reviews the U.S. and British Electricity Price Reform practice, and summarizes the experiences and lessons in Electricity Price Reform that we can learn from; then reviews the history of Electricity Price Reform and analyses the status quo of current electricity price formation mechanism in china, also analyses the problems of the electricity price formation mechanism in china, e.g. market mechanism can not effectively play its role in the electricity price formation mechanism in china, and can not reflect the degree of resources scarcity ,and serious cross-subsidization and so on. Next, this paper analyses the importance of the power onto-grid price formation mechanism in the whole price chain, which has a crucial role in electricity reform; also analyses the relations of the power generating plants and the power grid company before and after the electricity reform. And then briefly introduces several price bidding pattern, and focus on the comparative analysis of the two-part bidding pattern and other bidding model, obtains the conclusion where the two-part competitive bidding pattern is compared with the single-part competitive bidding pattern. In this paper, the single-part competitive bidding pattern as a frame of reference, using the methods of game theory under the incomplete information and incomplete information, analyze that why the two-part competitive bidding pattern can be suitable in current stage and where its advantages is. Finally, based on the preceding analysis, this paper presents the relevant policy recommendations about in the current historical period the implementation of two-part competitive bidding pattern and improving electricity price formation mechanism.