Research On The Reform Of Energy Regulation System In China

Energy is the foundation of the national economy and social development. As the size of China’s economic and social development growing, energy demand is rising and energy external dependence is increasing. To cope with the climate change and the environmental pressures, the task of the energy administrative management will be getting heavy. The function of the energy administrative management is mainly divided into two parts: the functions of energy policy and the functions of energy regulation. This paper mainly involves the functions of energy regulation and its system reform. This paper consists of six chapters, including four major parts:The first chapter: the analysis of the basic problems of energy regulation. Energy is something that can provide various forms of energy or energy material movement. It has the quality of the resources and commodities. The energy pipeline is often monopolistic. The energy is also one product that can be alternative. It has some public and political Characteristics. Energy regulation means that national energy regulator, according to laws, regulations, legal procedures and standards for energy, monitor and control the energy industry and market participants (the enterprise or individual) and relevant stakeholders related energy activity. It is one of the administrative activities. The nature of the energy regulation is both social and economic. The regulation of the market of energy is limited and also has some public and political Characteristics. Energy regulation conducive to ensuring the energy security, the stability of energy market and to saving energy and improve energy efficiency. It can also optimize energy structure and protect the environment and realize the goal corresponding to climate change. The scope and content of the energy regulation are mainly including: energy security regulation, energy market regulation, energy conservation and energy efficiency regulation, the energy structure regulation and energy environment regulation. Energy regulation can be divided into the following several kinds: social regulation and economic regulation; Self-discipline regulation and other-discipline regulation; regulation by order and motivational regulation; regulation by rule and regulation by principle. There are three theory foundations in the energy regulation: the first is the markets improve theory. It overcomes the defects of the market failure theory and regulatory failure theory. This theory emphasizes the coordinating role to promote the development of energy market between the government and private sector. The second is the theory of universal service. The basic requirement of it is to ensure that consumers can get fair, universal and basic energy services with reasonable price, especially in order to ensure remote areas and rural areas and vulnerable groups obtain appropriate energy services. The obligation to provide energy universal service has become the general clause of energy service contract. The third is the theory of sustainable development. It require that in the exploitation and utilization of energy resources, we must not only consider the needs of contemporary, but also consider the needs of future generations to keep sustainable development of energy, economy and environment . The basic requirements of it are to optimize energy structure, to improve energy efficiency, to save energy and strengthen the environment protection, etc.The second chapter: the situation and the problem of the energy regulation system and its reform in China. Chinese energy regulation system is in the transition from planned economy system to the market economy system. Energy regulation system, mainly involving three problems: the establishment of energy regulators, the allocation of energy regulatory functions and the laws and rules of energy regulation. Vertically, China’s energy industry has experienced from highly centralized system to market system. There are also some improvements in separating government functions from enterprise management and in the specialization of energy regulators, but the structure general of energy regulation is still scattered and not changed greatly. Horizontally, the regulatory functions of coal, electric power, nuclear energy, oil and gas, energy conservation and energy efficiency, renewable energy are confused and the energy regulators are scattered. We have both professionalized energy regulators such as the Administration of Coal Mine Safety and the State Electricity Regulatory Commission; also have some energy policy departments such as National Development and Reform Commission, the State Energy Administration. The allocation of energy regulatory functions is confused, decentralized and vague etc. The establishment of energy regulators is instable, scattered, non-comprehensive and non-efficient. There is still not having one unified energy regulator. The standardization of construction of energy administrative organizations is relatively backward. Energy legislation cannot keep up with the need of reform. Therefore, the reform of energy regulation system is the only way for us. We suggest that the basic way of reform of Chinese energy regulation system is the following: the first, according to the principle of regulatory independence, we must separate government functions from enterprise management and rationalize the relationships between the energy policy departments and the energy regulators. The energy regulators must be established independently. Second, according to the principle of separation between energy policy functions and energy regulation, we must relax economic regulation and strengthen the social supervision. With the development of regulatory functions of energy security, energy environment, energy conversation and energy efficiency, we must also clarify the scope of energy regulatory function. Third, given that the reform must realize gradually and the operability of the reform plan, we put forward the three-step strategy: the first step is to keep existing situation of energy regulation perspective and combine other energy regulatory functions into energy policy departments, such as National Development and Reform Commission and the State Energy Administration. The second step is to execute independent regulation perceptively. Strengthening the regulatory independence of the Administration of Coal Mine Safety and the State Electricity Regulatory Commission, we can establish the Nuclear Regulatory Commission, the Oil and Natural Gas Regulatory Commission, the Energy Conversation and Renewable Energy Regulatory Commission which independently perform the regulatory functions of the energy industry perceptively. The third step is comprehensive energy regulation. We will combine all of the energy regulatory functions into an independent energy regulatory commission. According to the above, we can set up the short-term goals, the medium-term targets and the long-term goals of the reform of energy regulation system.The third chapter: the reform of allocation of energy regulatory functions. The energy regulatory function is one of the core problems in the reform of energy regulation system. We suggest that the allocation of energy regulatory functions shall follow the principle of independence, efficiency, legality and separation of functions. It must handle some relationships as the following: the first is the allocation of functions between the energy regulators and the energy policy departments. It is mainly to realize the separation between energy policy functions and energy regulatory functions. To realize this purpose, we can transform progressively from the combination of energy policy functions and energy regulatory functions to the practice of energy regulatory functions perceptively, and realize the unity of energy regulation function at the end. The second is the allocation of functions between the energy regulators and other regulators, such as antitrust authority, environmental regulators and safety regulators. The basic way to resolve this issue is to strengthen the coordination between energy market policy and competition policy. We must establish the general principles that the environment regulation and the safety regulation is prior to the energy regulation. The third is the allocation of functions between the central energy regulators and the local ones. China is an unitary country. We practice one system of vertical integration. While ensuring the authority of the central regulators, we should consider the regional disparity and local special circumstances and give some energy regulatory functions to the local regulators in order to fill the vacuum of energy regulation and obtain the support of the local governments.The fourth chapter: the reform of the structure of energy regulators. The pattern of the structure of energy regulators has three kinds: Japan’s centralized energy administration; independent energy regulatory commission in the United States and the combination of administrative departments and the public corporation in France. These modes have their advantages and disadvantages, from the development trend of independence and autonomy, independent energy regulators is a choice of most developed countries. Most research results show that we should set independent and professional energy regulator to perform the energy market regulatory functions. The government’s energy administrative functions and energy regulatory functions must be separated. According to the principle of separation, we should ensure that energy regulators have independent legal status, in order to perform the functions with authority.We suggest that the reform of the structure of energy regulators shall follow three steps: the first step is to take a relatively-centralized energy administration. It means that we do not set up the new energy regulators, but we must adjust the energy regulatory functions and strengthen the legislation about energy regulation. Keeping the existing functions of the Administration of Coal Mine Safety, the National Nuclear Safety Administration (under Ministry of Environmental Protection) and the State Electricity Regulatory Commission, other energy regulatory functions focus to the National Development and Reform Commission and the State Energy Administration. Because we need a strong government to decide the energy industry policy and push the reform of energy market, this is also conducive to the stability and unity of the energy policy. The second step is to take the specialized energy regulators for each area of energy. The Administration of Coal Mine Safety and the State Electricity Regulatory Commission remain unchanged. We can set up the Energy Environment and Nuclear Regulatory Commission, responsible for energy environment supervision and nuclear regulation. We can also establish the Oil and Gas Regulatory Commission, the Energy Conversation and Renewable Energy Regulatory Commission. The third step is to adopt comprehensive energy regulators. We can cancel the State Energy Administration and set up the Ministry of Energy or the Ministry of Environment and Energy which exercise unified administrative functions of environment and energy and formulate national energy or environmental strategy, plan and policy. The National Energy Committee remains as the agency for deliberation and coordination under the state council, responsible for energy important strategic and important policy. We must set up the Energy Regulatory Commission which exercises unified energy regulatory functions and accepts the legal surveillance by the Ministry of Energy or the Ministry of Environment and Energy.The fifth chapter: the related reforms of the reform of energy regulation system. This part mainly includes three sections: policy coordination mechanism, interest balance mechanism and relative legislation. During the reform process of reform of energy regulation system, it will inevitably involve various problems, such as the coordination between national economic policy, energy policy and environmental policy at the macroscopic level, the coordination between energy industry policy and competition policy as well as the cooperation among the various administrative agencies and the energy regulators. Policy coordination can take many forms, such as setting up agencies for deliberation and coordination or some temporary agencies, building the system of joint conference, the system of reporting and information communication, the system of joint enforcement and so on. There are also some good experiences from other countries, such as cooperation agreement, exchanging representatives between energy regulators as well as the joint formulation of the documents and reports. The development trend of policy coordination mechanism is the following: diversification, legalization and taking form of contract. The essence of the reform of energy regulation system is the balance between various interests: social, economic and ecological interests; the interests of different regions; intergenerational interests; the interests of energy industry and consumers; the interests of the central government and local authorities etc. To realize this balance, we must design a reasonable mechanism of ecological compensation and a marketed energy pricing mechanism. The construction of energy industry organizations and consumer organizations is also good for balancing of interests. Law is in the best balancer of interests. The legislation supporting the reform of energy regulation system can help to realize the standardization and legalization of energy regulation. China’s energy regulatory legislation should be fully absorb the advanced experience of the European Union and the United States, complied with the trend of liberalization, ecology, humanism, and internationalization. We must accelerate the process of the energy legislation, in order to consolidate and safeguard the reform of energy regulation system smoothly.