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Restructure in Power Sector Urged
China's electric power sector should speed up efforts to separate its power generating plants from transmission grids, experts said.
The separation of power generation and transmission is an integral part of the sector's restructuring, they said.
"Generating companies should be completely separate from power transmission and distribution," said Peter Egger, a senior expert from the World Bank.
The separation is a prerequisite for the power sector before it can establish competitive power markets in China, Egger said at the Workshop on Competitive Power Markets for China, which opened Monday in Beijing.
The Chinese Government has also recognized that the separation is a pressing factor in improving the electric power markets and launching a new competitive pricing mechanism.
The separation was implemented in the first half of the year in the Shanghai Municipality, Shandong, Zhejiang, Heilongjiang, Jilin and Liaoning provinces.
According to the separation rules, a province must have at least five independent power generating plants, each occupying no more than one-fifth of the province's total installed generating capacity.
Power generators must bid with each other for access to power transmission grids allowing the transmission companies to purchase comparatively low-priced electricity and sell it to consumers.
Consumers can therefore choose electricity suppliers and benefit from the separation.
Electricity prices in some localities, especially in rural areas, have consequently been reduced.
The State Council approved the plan to separate power generation from transmission and distribution in 1999.
Power production and distribution were formerly a single entity in China under the planned economy, which resulted in monopolies on power markets by some power companies and thus higher prices.
The separation is also expected to spur power generators to cut production costs and lower electricity prices to maintain market share, experts said at the two-day workshop.
The workshop is co-sponsored by the State Development Planning Commission and the World Bank and Energy Foundation.
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