Improvement Of Electricity Price Formation Mechanism

Reform of power system, the main part of reform of China' s economic system, has been implemented in an all-round way since 2003 with rationalizing tariff mechanism as the core. The fulcrum of the electricity market -the price plays an important role in promoting competition, improving power system operating efficiency and optimizing the allocation of resources. Therefore, study on the mechanism of electricity pricing, is of important theoretical significance to improve electricity tariff theory, and will also help rationalize the tariff, deepen China' s tariff system reform, optimize the allocation of resources, and coordinate advancement of China's power industry and social, economic and resource development.Electric power is an important secondary energy, and the power industry is a monopoly industry of public utility. Therefore, in addition to reflecting the market principle of supply and demand, government intervention is also inevitable to power price. The development of the tariff mechanism of power since the liberalization has tight links with the transformation of China' s economic system, the development of socialist market economy, the transformation of China' s economic system, and the adaptation of the industrial structure. Many problems arise because of the comparatively lagging behind of power system reform, causing current tariff mechanism not completely adapt to the social reform and economic development and not conducive to the optimum allocation of resources.As a special commodity, its tariff mechanism and general principles of tariff are not totally consistent with those of other commodities. The mechanism mainly consists of planned tariff mechanism, market tariff mechanism, and bilateral tariff mechanism, and general principles are made up of principles of cost reimbursement, reasonable profit-making, and equitable burden-sharing. The main factors affecting China's tariff mechanism are supposed to be: the interaction between the supply-and-demand situation and the price, the complementary action of the competition and regulation of the electricity market, and the connection of the price of every link in the whole pricing chain, based on China's current social and economic development and the supply-and-demand condition of electricity power market. Drawing lessons from the transformation and characteristics of tariff mechanism abroad, aiming at some controversies and problems emerging from the current market pricing on the net, in transmission and distribution and sales, starting from the target of the reform of the tariff mechanism, the suggestions and proposals to built and improve the mechanism are: to put two-part pricing into practice reasonably in the net and sale part, dealing with the cost fairly to price at different electric voltage level; and in transmission, to calculate the real operating cost of the electricity enterprises and to set the fair profit target. Only in this way, the tariff mechanism of electricity in China will become more reasonable and scientific to meet to the requirement of the economic and social development.