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The National Development and Reform Commission has further deepened the market-oriented reform of on-grid electricity prices for coal-fired power generation.
2021-11-22
Recently, the National Development and Reform Commission issued the “Notice on Further Deepening the Market-Oriented Reform of On-Grid Electricity Prices for Coal-Fired Power Generation.”
The main contents of the reform are:
(1) All coal-fired power generation capacity will be gradually liberalized with respect to on-grid electricity prices. In principle, all such power will be integrated into the electricity market, with on-grid prices determined through market transactions within a band of “benchmark price plus upward and downward adjustments.” The existing benchmark price for coal-fired power will continue to serve as the reference point for setting prices for new‑energy generation and other sources.
(2) Expand the range of price fluctuations for market‑based electricity trading. The current cap on market‑traded coal‑fired power prices—no more than a 10% increase and, in principle, no more than a 15% decrease—will be broadened to allow price fluctuations of up to 20% in either direction, with no limit on the 20% increase for high‑energy‑consumption enterprises. Spot electricity prices shall not be subject to the aforementioned limits.
(3) Promote the full participation of industrial and commercial users in the market. All localities shall systematically facilitate the entry of all industrial and commercial users into the electricity market. Electricity will be purchased at market prices, and the catalog‑based sales tariffs for industrial and commercial users will be abolished. At present, all users who have not yet entered the market—those with voltage levels of 10 kV and above—must do so, and other user categories should follow suit as soon as possible. For those who have not yet procured electricity directly from the power market, grid‑based agents will undertake procurement; the agent‑procurement price will be determined primarily through on‑exchange centralized bidding or competitive tendering. When first selling electricity to such agent‑procured customers, the grid operator must provide at least one month’s advance notice. For customers who have previously participated in market transactions but have since switched to grid‑agent procurement, the applicable price shall be 1.5 times the grid operator’s standard rate for purchasing electricity on behalf of other customers.
Local authorities are encouraged to implement temporary preferential policies for electricity consumption by small and micro enterprises and individual business households.
(4) Maintain stable electricity prices for residential and agricultural users. Residential consumers—including schools, social welfare institutions, community service centers, and other public‑service entities that pay residential rates—and agricultural users shall have their electricity supply guaranteed by grid enterprises, with pricing in accordance with the existing regulated retail tariff policy. Local authorities shall give priority to allocating low‑cost power sources to meet the electricity needs of residential and agricultural users.
— Reprinted from “Henan Nonferrous Metals Brief, Issue No. 10”
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