can be done, and what is defined as legal
responsibility must be done”.
• Effective market regulation. Unified, independent and specialised regulatory authorities
and a modern energy regulation system will
be established. The latter will demonstrate
clear rights and responsibilities, fairness and
impartiality, transparency and efficiency, and
effective regulation. It will address issues
such as policymaker-regulator overlaps,
decentralisation, the current lack of regulatory
functions and the shortage of regulatory personnel and powers.
• Well-developed legal system. A system of
regulations and standards will be developed—
based on the Energy Law and supported by
legislation in the power, coal, oil, and gas
sectors—to ensure national energy security
and sustainable development. It will address
issues across the energy system such as the
lack of consistent guidelines and principles for
legislation, and the present inconsistency and
lack of alignment of the current legal system.
4.1.2 Strategic Priorities
A modern energy market system should be created by:
(i) separating natural monopoly enterprises
from competitive businesses, improving
market access and encouraging investors
to enter the energy sector in an orderly
manner;
(ii) establishing and enhancing an energy
trading system that integrates the national
market with multiple regional markets and
applies consistent rules, complementary
functions and multi-level coordination;
(iii) establishing power system operators with
independent scheduling and trading to
effectively separate ownership and operation of power transmission and distribution networks;
(iv) encouraging oil and gas pipeline operators
to gain exclusive rights, separating pipeline transport services from downstream
retail sales, and providing fair access for
third parties to pipeline networks; and
(v) accelerating the development of smart
energy systems and an integrated energy
services market, and building an energy
system where centralised generation, distributed energy, energy storage and
demand-side load management enjoy
equal access.
The energy market’s price mechanism should
be reshaped by:
(i) applying the principle of “allowable costs
plus a reasonable profit” to natural
monopolies like pipelines, as this incentivises monopoly industries to reduce prices and other companies to innovate;
(ii) deregulating market prices in competing
segments to achieve a market-determined
price mechanism;
(iii) implementing an electricity price mechanism—that controls power transmission
and distribution and deregulates power
generation, sales and use—by establishing
a well-designed, independent and
performance-based power pricing system;
(iv) determining the methods needed to disclose power transmission and distribution
costs and pricing;
(v) deregulating the price of oil and natural
gas (which will be based on market competition) and taking steps to deregulate
pricing in infrastructure like oil and gas
pipelines (but not gas distribution
networks);
(vi) establishing and improving directional
subsidy and relief mechanisms for people
in need and some non-profit industries;
and
(vii) eliminating cross-subsidies in energy
prices.
The energy management system should be
improved by:
(i) establishing and strengthening regulatory
authorities to better manage state-owned
natural resources and monitor natural
ecosystems. This should be in line with the
28
X. Zhaoyuan and M. Ishwaran
responsibility must be done”.
• Effective market regulation. Unified, independent and specialised regulatory authorities
and a modern energy regulation system will
be established. The latter will demonstrate
clear rights and responsibilities, fairness and
impartiality, transparency and efficiency, and
effective regulation. It will address issues
such as policymaker-regulator overlaps,
decentralisation, the current lack of regulatory
functions and the shortage of regulatory personnel and powers.
• Well-developed legal system. A system of
regulations and standards will be developed—
based on the Energy Law and supported by
legislation in the power, coal, oil, and gas
sectors—to ensure national energy security
and sustainable development. It will address
issues across the energy system such as the
lack of consistent guidelines and principles for
legislation, and the present inconsistency and
lack of alignment of the current legal system.
4.1.2 Strategic Priorities
A modern energy market system should be created by:
(i) separating natural monopoly enterprises
from competitive businesses, improving
market access and encouraging investors
to enter the energy sector in an orderly
manner;
(ii) establishing and enhancing an energy
trading system that integrates the national
market with multiple regional markets and
applies consistent rules, complementary
functions and multi-level coordination;
(iii) establishing power system operators with
independent scheduling and trading to
effectively separate ownership and operation of power transmission and distribution networks;
(iv) encouraging oil and gas pipeline operators
to gain exclusive rights, separating pipeline transport services from downstream
retail sales, and providing fair access for
third parties to pipeline networks; and
(v) accelerating the development of smart
energy systems and an integrated energy
services market, and building an energy
system where centralised generation, distributed energy, energy storage and
demand-side load management enjoy
equal access.
The energy market’s price mechanism should
be reshaped by:
(i) applying the principle of “allowable costs
plus a reasonable profit” to natural
monopolies like pipelines, as this incentivises monopoly industries to reduce prices and other companies to innovate;
(ii) deregulating market prices in competing
segments to achieve a market-determined
price mechanism;
(iii) implementing an electricity price mechanism—that controls power transmission
and distribution and deregulates power
generation, sales and use—by establishing
a well-designed, independent and
performance-based power pricing system;
(iv) determining the methods needed to disclose power transmission and distribution
costs and pricing;
(v) deregulating the price of oil and natural
gas (which will be based on market competition) and taking steps to deregulate
pricing in infrastructure like oil and gas
pipelines (but not gas distribution
networks);
(vi) establishing and improving directional
subsidy and relief mechanisms for people
in need and some non-profit industries;
and
(vii) eliminating cross-subsidies in energy
prices.
The energy management system should be
improved by:
(i) establishing and strengthening regulatory
authorities to better manage state-owned
natural resources and monitor natural
ecosystems. This should be in line with the
28
X. Zhaoyuan and M. Ishwaran