Research On Operation Efficiency Of Power Market

The main purpose of the electric industry restructuring is to establish a market system to optimize the resource deployment and promote the production efficiency through competition. A number of countries have started the restructuring since the 1990s. In the past few years, China has accelerated the reform process in the electric industry. In 2002, China framed the electric industry reform plan and began the asset regrouping. An initial power market allowing for competition in the generation sector was established in some provinces. Market efficiency is an important metric in evaluating the performance of a market. In this paper, the author concentrates on the theoretical and empirical analysis of the problems of the power market efficiency and tries to find countermeasures to improve the market system.With HHI index we demonstrate that the provincial power market appears to be an oligarchy because of the limited number of independent power producers. The manipulation of electricity price by the oligarchies reduces the market efficiency and affects the effective resource deployment. Fair competition is affected because the transmission company acts as a market participant while at the same as the umpire. The development and economical operation of the power grid is restricted because there is no reasonable network pricing mechanism. The market participants cannot manage the risks associated with the fluctuation of electricity price because of the lack of forward contracts. Current power market system does not improve the economic efficiency and does not optimize resource deployment because there is not an effective pricing mechanism.In view of the problems associated with the current power market, the author puts forward some proposals on basis of the analysis of the power supply and demand in several relevant provinces. First, the energy trade barriers between provinces should be removed to promote competition and improve resource utilization. Second, the single-buyer market shall be developed to a multiple-buyer market, allowing large customers to participate in the wholesale market directly. Third, forward contracts transaction shall be introduced to enhance the electric construction and facilitate therisk management. This paper also analyzed the functions and significance of futures contracts with the conclusion that the application of futures contracts shall be considered seriously as the power market develops. Through continuous improvement, the power market will mature, the electric price will become more reasonable, the utilization of social resources will be improved and the social welfare will be promoted.