Table 12 Opinions on promoting power sales reform
Main content
Main requirements
Market participants in power sales
Power sales companies fall into three categories: (i) power sales
companies that are grid companies; (ii) power sales companies
with the right to operate a power distribution network and use
private capital to invest in incremental power distribution
networks; and (iii) independent power sales companies without the
right to operate a power distribution network and that do not
provide minimum supply services
Grid companies, eligible power producers, qualified high-tech
industrial parks and economic and technological development
zones, distributed power and microgrid owners, utilities including
water, heat and gas suppliers, energy-saving service providers,
private capital and private enterprises may invest in or form power
sales companies to carry out power sales activities
Access and exit mechanisms for power sales
market participants
Access and exit of market participants, not subject to
administrative approval, need to be included in an annual list of
provincial government announcements. Such market participants
need to make commitments and be registered at trading
institutions. Power sales companies need to be independent legal
entities registered in accordance with the Company Law of the
People’s Republic of China
Business and trading activities of market
participants
The core business of power sales companies is electricity purchase
and sales, which could include energy performance contracting,
energy-saving strategies, electricity use consulting and other
power-related value-added services
Before selling electricity to users in the quantity and at the price
agreed with them, power sales companies may trade with power
producers freely or through trading platforms. Distributed power
or microgrid users may delegate electricity purchase and sales to
power sales companies. The power purchase price for users
involved in market trading consists of the market transaction price,
the transmission and distribution tariff (including line loss and
cross-subsidy) and government funds
Grid companies offering measurement, meter reading, billing,
settlement, installation, repair and other power supply services are
responsible for settling electricity bills and ensuring safety of the
funds. Grid companies ensure minimum power supply in the
regions they serve
Deregulating investment in incremental
distribution capacity
Encourage the development of the power distribution business
through mixed ownership. Deregulate investment in incremental
distribution capacity for qualified market players
Private capital investing in and wholly controlling incremental
power distribution networks, i.e. with the right to operate the
power distribution network, also has the same rights as the grid
companies in the same power supply area and should fulfil the
same responsibilities and obligations
There could be multiple power sales companies in one power
supply area. But only one of them has the right to operate the
power distribution network and provide minimum supply services
Build credit system and risk prevention
mechanisms for the power sales market
Establish a market participant credit rating mechanism and
blacklist. Government could intervene in the market in the case of
serious abnormalities
Special Report 4: China’s Energy System Revolution
509
Main content
Main requirements
Market participants in power sales
Power sales companies fall into three categories: (i) power sales
companies that are grid companies; (ii) power sales companies
with the right to operate a power distribution network and use
private capital to invest in incremental power distribution
networks; and (iii) independent power sales companies without the
right to operate a power distribution network and that do not
provide minimum supply services
Grid companies, eligible power producers, qualified high-tech
industrial parks and economic and technological development
zones, distributed power and microgrid owners, utilities including
water, heat and gas suppliers, energy-saving service providers,
private capital and private enterprises may invest in or form power
sales companies to carry out power sales activities
Access and exit mechanisms for power sales
market participants
Access and exit of market participants, not subject to
administrative approval, need to be included in an annual list of
provincial government announcements. Such market participants
need to make commitments and be registered at trading
institutions. Power sales companies need to be independent legal
entities registered in accordance with the Company Law of the
People’s Republic of China
Business and trading activities of market
participants
The core business of power sales companies is electricity purchase
and sales, which could include energy performance contracting,
energy-saving strategies, electricity use consulting and other
power-related value-added services
Before selling electricity to users in the quantity and at the price
agreed with them, power sales companies may trade with power
producers freely or through trading platforms. Distributed power
or microgrid users may delegate electricity purchase and sales to
power sales companies. The power purchase price for users
involved in market trading consists of the market transaction price,
the transmission and distribution tariff (including line loss and
cross-subsidy) and government funds
Grid companies offering measurement, meter reading, billing,
settlement, installation, repair and other power supply services are
responsible for settling electricity bills and ensuring safety of the
funds. Grid companies ensure minimum power supply in the
regions they serve
Deregulating investment in incremental
distribution capacity
Encourage the development of the power distribution business
through mixed ownership. Deregulate investment in incremental
distribution capacity for qualified market players
Private capital investing in and wholly controlling incremental
power distribution networks, i.e. with the right to operate the
power distribution network, also has the same rights as the grid
companies in the same power supply area and should fulfil the
same responsibilities and obligations
There could be multiple power sales companies in one power
supply area. But only one of them has the right to operate the
power distribution network and provide minimum supply services
Build credit system and risk prevention
mechanisms for the power sales market
Establish a market participant credit rating mechanism and
blacklist. Government could intervene in the market in the case of
serious abnormalities
Special Report 4: China’s Energy System Revolution
509