Reform of electricity transmission and distribution price in China sees further progress.
Lately, State Grid Corporation of China (SGCC) disclosed at the second-quarter press conference that standards for price of electricity transmission and distribution in 11 provincial-level power grids in provinces like Anhui have been approved by National Development and Reform Commission (NDRC) and put into practice. Price of electricity transmission and distribution in other 15 provincial-level power grids in regions except Tibet is still under calculation and is expected to gain approval before the end of June.
Officials from SGCC disclosed that additional charge on urban public utility included in electricity charge will be cancelled soon, cutting the electricity price down by 0.011 yuan per kilowatt on average in China. Researchers believed that a series of measures will reduce burdens of users and stimulate electricity consumption, thus improving profitability of power generation enterprises.
Price reform continues in 2017 and reform of electricity transmission and distribution price also welcomes new progress.
The NDRC stressed accelerating promotion of reform of electricity transmission and distribution price at the end of last August. Executive meeting of the State Council proposed on May 17 to introduce a batch of new measures of reducing costs while implementing policies of relieving burdens of enterprises which were launched previously. Specifically, it required advancing reform of electricity transmission and distribution price at provincial-level power grids and lowering the price reasonably.
SGCC stated that it would move fast in pushing forward the reform in provincial-level power grids within its business scope.
According to a public utility research of Everbright Securities Company Limited, transparency between power generation enterprises and users will be improved after approval on electricity transmission and distribution price in provincial-level power grids are released. Under normal situation, electricity transmission and distribution price will be certainly lower than the currently actual price of enterprises at provincial-level power grids and hence will reduce electricity price of users. The final approval on the electricity transmission and distribution price at provincial-level power grids will be decisive to build a comprehensive provincial-level power transmission market.
Statistics show that SGCC reduced energy cost of uses by more than 140 billion yuan by introduce various measures last year. SGCC’s spokesman Wang Yanfang remarked that the SGCC will carry out the new measures of lowering expenses in 2017. It will entirely promote the reform in the remaining provincial-level power grids, stop collecting repayment charge on electrified railways from railway transportation enterprises, expand direct transaction between power generation enterprises and uses, and stop collecting additional charge on urban public utility.
Seven items of national-level government funds or additional charge are included in electricity charge, accounting for about 6 percent of retail price of electricity, said Lyu Dong from Financial Department of SGCC. It is reported that additional charge on urban public utility will be cancelled soon, cutting the electricity price down by 0.011 yuan per kilowatt on average in China. Based on the electricity quantity sold across the country, around 35 billion yuan of electricity consumption cost of the whole society can be saved.
Environmental protection analyst from Shenwan Hongyuan Securities thought that a series of measures of reducing expenses are expected to cut costs of energy-using enterprises and stimulate electricity consumption, thus improving profitability of thermal power generation enterprises.
According to a research report of Kaiyuan Securities, the reform of electricity transmission and distribution price is a priority among priorities in 2017 and even in the following new power form. Investors can pay attention to trans-provincial power transmission and distribution enterprises. In addition, reduction in electricity price will also lead to decline in cost of high-quality power generation enterprises.
Establishment of power market and pilot of reform of power distribution business are also being actively promoted, officials from SGCC disclosed. At present, the company has built 27 provincial-level power transaction centers and is building some provincial (regional, or municipal)-level power market. In terms of pilot of reform of power distribution business, mixed-ownership companies in various provinces negotiate with intentional investors and social capitals and have come to agreement on initial investment intention of some pilot projects. Besides, over-bought and over-sold market competition has taken initial shape.
Translated by Vanessa Chen
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