International Energy Network News: The reporter has been informed that the Inner Mongolia Electric Power Multilateral Trading has been suspended since early August 2010. Almost a year ago, there is no clear timetable for restarting.
On May 6, 2010, Inner Mongolia Electric Power Multilateral Trading Market was launched in a high profile. This is the first power multilateral trading market that is officially operating in China. It is seen as an important breakthrough in the reform of electricity price marketization. However, after 3 months of operation, Inner Mongolia Electric Power Multilateral Trading was halted by the Development and Reform Commission.
So far, the official website of the North China Electricity Regulatory Authority has only published the multilateral power trading in Inner Mongolia in May, June and July 2010. At the same time, in addition to the approval of direct trading trials for major users in Fujian, the pilots for transactions in Zhejiang, Jiangsu, and Chongqing were still frozen.
A person close to the National Development and Reform Commission stated that the above power trading model is prone to low electricity prices and preferential electricity prices, which is inconsistent with the “energy saving and emission reduction†policy. "This is an important reason for stopping and freezing."
The State Electricity Regulatory Commission official said, “The above transactions involve access, electricity, electricity prices, settlement, transaction methods, transaction organizations, etc. It needs the coordination of multiple departments such as the Electricity Regulatory Commission, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the Energy Bureau. Different departments have different perspectives. The purpose of carrying out multilateral transactions and direct purchases of electricity by large users is not to reduce electricity prices, unlike the preferential electricity prices."
The above-mentioned SERC officials suggested that the state should establish a long-term mechanism for users to participate in the market as soon as possible and promote the expansion of the scope of the pilot.
On June 29 this year, the State Council issued the "Several Opinions on Further Promoting Sound and Rapid Economic and Social Development in Inner Mongolia", clearly proposing that Inner Mongolia establishes a sound electricity market mechanism and vigorously promotes multilateral electricity trading.
On July 4, the State Administration of Electricity and North China Electric Supervisory Authority published on its official website an article entitled “Unswervingly Promoting Electricity Multilateral Transaction†to express its expectation of multilateral trade in Inner Mongolia.
Direct purchase of electricity suspected of "preferential electricity prices"?
In fact, after the launch of the Multilateral Trading Pilot Project in Inner Mongolia, the National Development and Reform Commission issued a document on the name of energy conservation and emission reduction to regulate the price of electricity. Both documents mentioned that the unauthorized purchase of electricity should be strictly investigated.
On May 19, 2010, the six ministries and commissions including the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the China Electricity Regulatory Commission jointly issued the "Notice on Immediately Organizing the National Electricity Price Inspection". One of the inspection focuses is that "the local government and its relevant departments have not approved it. In the name of power users and power generation companies to directly trade, bilateral transactions and other relatively variable energy-consuming enterprises or industrial parks to implement the preferential tariff behavior."
On June 23, 2011, the National Development and Reform Commission again announced the "Notice on rectifying and standardizing the electricity price order." According to the notice, “Without the approval of the Commission, the State Electricity Regulatory Commission, and the National Energy Administration, to carry out large-scale direct-operated power supply pilots, or to reduce the price of electricity for enterprises in other names in disguise, we must immediately stop the implementation.â€
“The National Development and Reform Commission is the initiator of the transmission and distribution prices. It is very cautious about direct purchase of electricity pilots, so the price of transmission and distribution tariffs in pilot provinces and cities has not been approved for a long time,†said a power industry expert.
In June 2010, the National Development and Reform Commission formally approved the transmission and distribution tariffs for direct trading trials among large users in Zhejiang, Jiangsu, and Chongqing. Afterwards, the above-mentioned provincial direct electricity purchase plan was reported to the National Development and Reform Commission and the State Electricity Regulatory Commission.
“But it has not yet been approved.†The aforementioned Supervisor of the Electricity Regulatory Commission stated that the price management department still has concerns. Since the direct purchase price and the multilateral transaction price are easily equal to the preferential tariff, large-scale direct transactions are difficult to carry out smoothly.
Electricity market reform stagnates?
The promotion of direct trading trials for major power users is an important way to promote the reform of the power system.
“Electrical Reform No. 5†pointed out that, as a precondition for the separation of transmission and distribution, pilot projects for power generation companies to directly supply power to users with higher voltage levels or greater power consumption and distribution networks should be carried out in areas where conditions permit. The price of the direct power supply is negotiated between the power generation company and the user, and the national transmission and distribution tariffs are enforced.
The premise for large consumers to purchase electricity directly is to implement independent transmission and distribution prices. The determination of transmission and distribution prices is considered by electric reform experts as a prerequisite for the reform of transmission and distribution.
In accordance with the current trading rules, provinces and cities participating in the pilot electricity purchase pilot project must submit the direct trading pilot program and the specific target of direct transaction to the electricity users and power generation companies to the SERC, the National Development and Reform Commission, and the Energy Bureau, and approve the approval of the three departments. It can formally carry out direct transactions between power users and power generation companies.
Due to the existence of administrative examination and approval, direct purchase of electricity pilots is difficult to develop in a large scale and quickly.
“The direct transaction of large users has been strictly controlled by the National Development and Reform Commission and the Electricity Regulatory Commission. Especially in the situation of tight supply of electricity and rebound of high energy-consuming industries, the direct purchase power threshold should be strictly controlled.†Deputy Secretary-General of China Electricity Council Ouyang Changyu Say.
In June 2009, the National Development and Reform Commission, the State Electricity Regulatory Commission, and the National Energy Administration issued the Notice on Improving the Direct Trading Pilot Program of Power Users and Power Generation Enterprises. This document has become a programmatic document guiding direct trading between power users and power generation companies.
After the document was issued, several provinces reported the plan, but many of the plans were only copies of the preferential electricity price and did not establish a market mechanism. This also became the focus of the National Development and Reform Commission's clean-up and inspection of illegal electricity prices.
SERC officials said, “If large users directly account for 60%-70% of their electricity, electricity market reforms are half successful. Today, large users directly trade only about one-thousandth of the national electricity. This reform was halted indefinitely."
On May 6, 2010, Inner Mongolia Electric Power Multilateral Trading Market was launched in a high profile. This is the first power multilateral trading market that is officially operating in China. It is seen as an important breakthrough in the reform of electricity price marketization. However, after 3 months of operation, Inner Mongolia Electric Power Multilateral Trading was halted by the Development and Reform Commission.
So far, the official website of the North China Electricity Regulatory Authority has only published the multilateral power trading in Inner Mongolia in May, June and July 2010. At the same time, in addition to the approval of direct trading trials for major users in Fujian, the pilots for transactions in Zhejiang, Jiangsu, and Chongqing were still frozen.
A person close to the National Development and Reform Commission stated that the above power trading model is prone to low electricity prices and preferential electricity prices, which is inconsistent with the “energy saving and emission reduction†policy. "This is an important reason for stopping and freezing."
The State Electricity Regulatory Commission official said, “The above transactions involve access, electricity, electricity prices, settlement, transaction methods, transaction organizations, etc. It needs the coordination of multiple departments such as the Electricity Regulatory Commission, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the Energy Bureau. Different departments have different perspectives. The purpose of carrying out multilateral transactions and direct purchases of electricity by large users is not to reduce electricity prices, unlike the preferential electricity prices."
The above-mentioned SERC officials suggested that the state should establish a long-term mechanism for users to participate in the market as soon as possible and promote the expansion of the scope of the pilot.
On June 29 this year, the State Council issued the "Several Opinions on Further Promoting Sound and Rapid Economic and Social Development in Inner Mongolia", clearly proposing that Inner Mongolia establishes a sound electricity market mechanism and vigorously promotes multilateral electricity trading.
On July 4, the State Administration of Electricity and North China Electric Supervisory Authority published on its official website an article entitled “Unswervingly Promoting Electricity Multilateral Transaction†to express its expectation of multilateral trade in Inner Mongolia.
Direct purchase of electricity suspected of "preferential electricity prices"?
In fact, after the launch of the Multilateral Trading Pilot Project in Inner Mongolia, the National Development and Reform Commission issued a document on the name of energy conservation and emission reduction to regulate the price of electricity. Both documents mentioned that the unauthorized purchase of electricity should be strictly investigated.
On May 19, 2010, the six ministries and commissions including the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the China Electricity Regulatory Commission jointly issued the "Notice on Immediately Organizing the National Electricity Price Inspection". One of the inspection focuses is that "the local government and its relevant departments have not approved it. In the name of power users and power generation companies to directly trade, bilateral transactions and other relatively variable energy-consuming enterprises or industrial parks to implement the preferential tariff behavior."
On June 23, 2011, the National Development and Reform Commission again announced the "Notice on rectifying and standardizing the electricity price order." According to the notice, “Without the approval of the Commission, the State Electricity Regulatory Commission, and the National Energy Administration, to carry out large-scale direct-operated power supply pilots, or to reduce the price of electricity for enterprises in other names in disguise, we must immediately stop the implementation.â€
“The National Development and Reform Commission is the initiator of the transmission and distribution prices. It is very cautious about direct purchase of electricity pilots, so the price of transmission and distribution tariffs in pilot provinces and cities has not been approved for a long time,†said a power industry expert.
In June 2010, the National Development and Reform Commission formally approved the transmission and distribution tariffs for direct trading trials among large users in Zhejiang, Jiangsu, and Chongqing. Afterwards, the above-mentioned provincial direct electricity purchase plan was reported to the National Development and Reform Commission and the State Electricity Regulatory Commission.
“But it has not yet been approved.†The aforementioned Supervisor of the Electricity Regulatory Commission stated that the price management department still has concerns. Since the direct purchase price and the multilateral transaction price are easily equal to the preferential tariff, large-scale direct transactions are difficult to carry out smoothly.
Electricity market reform stagnates?
The promotion of direct trading trials for major power users is an important way to promote the reform of the power system.
“Electrical Reform No. 5†pointed out that, as a precondition for the separation of transmission and distribution, pilot projects for power generation companies to directly supply power to users with higher voltage levels or greater power consumption and distribution networks should be carried out in areas where conditions permit. The price of the direct power supply is negotiated between the power generation company and the user, and the national transmission and distribution tariffs are enforced.
The premise for large consumers to purchase electricity directly is to implement independent transmission and distribution prices. The determination of transmission and distribution prices is considered by electric reform experts as a prerequisite for the reform of transmission and distribution.
In accordance with the current trading rules, provinces and cities participating in the pilot electricity purchase pilot project must submit the direct trading pilot program and the specific target of direct transaction to the electricity users and power generation companies to the SERC, the National Development and Reform Commission, and the Energy Bureau, and approve the approval of the three departments. It can formally carry out direct transactions between power users and power generation companies.
Due to the existence of administrative examination and approval, direct purchase of electricity pilots is difficult to develop in a large scale and quickly.
“The direct transaction of large users has been strictly controlled by the National Development and Reform Commission and the Electricity Regulatory Commission. Especially in the situation of tight supply of electricity and rebound of high energy-consuming industries, the direct purchase power threshold should be strictly controlled.†Deputy Secretary-General of China Electricity Council Ouyang Changyu Say.
In June 2009, the National Development and Reform Commission, the State Electricity Regulatory Commission, and the National Energy Administration issued the Notice on Improving the Direct Trading Pilot Program of Power Users and Power Generation Enterprises. This document has become a programmatic document guiding direct trading between power users and power generation companies.
After the document was issued, several provinces reported the plan, but many of the plans were only copies of the preferential electricity price and did not establish a market mechanism. This also became the focus of the National Development and Reform Commission's clean-up and inspection of illegal electricity prices.
SERC officials said, “If large users directly account for 60%-70% of their electricity, electricity market reforms are half successful. Today, large users directly trade only about one-thousandth of the national electricity. This reform was halted indefinitely."
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