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China Economic Reform

China's coal-producing province to reform electricity pricing

Xinhua News Agency | Wed,2016-03-02

A reform plan to open the electricity market in China's major coal-producing province of Shanxi was unveiled Tuesday, the latest effort by officials to let the market play a bigger role in the power system.

By 2017, Shanxi will have loosened its grip on the electricity industry allowing the market to determine the electricity sales price, as well as creating a relatively independent power trading exchange, according to a statement released by the National Development and Reform Commission.

It is predicted that by 2017, 30 percent of sales deals will be made directly with consumers by generators, the statement said.

The next stage, which is expected to start in three or more years, will see more market entities entering the power generation and sales side. This will increase competition, and perfect the market-determined electricity pricing mechanism. 

The plan is the government's latest effort to reform the electricity industry. Also on Tuesday, two power trading exchanges were established in Beijing, and the southern city of Guangzhou, another move by authorities to free electricity price. 

The trial of such reform in a major coal-producing province such as Shanxi is particularly notable as the region is using its overcapacity to generate more power.