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Do the Power Sector Reforms in China Reflect the Interests of Consumers?*

Published online by Cambridge University Press:  12 February 2009

Philip Andrews-Speed ,
Stephen Dow ,
Aijuan Wang ,
Jin Mao  and
Bin Wei
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Extract

China's electrical power industry has been undergoing piecemeal reforms over the last 15 years. Some of these reforms, such as substantial tariff increases, have been deliberate and have been implemented directly by government. Other changes, such as the increased variety of investors, including foreign investors, have been more spontaneous and have resulted in a gradual evolution in the way the industry works. In 1996 the Chinese government announced a more radical package of reform starting with the new Electricity Law which laid the foundations for a degree of competition in power generation, but without wholesale privatization.

Type
Research Notes
Information
The China Quarterly , Volume 158 , June 1999 , pp. 430 - 446
Copyright
Copyright © The China Quarterly 1999

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References

1. The research was carried out before the announcement in March 1998 of substantial reforms to government structure. At the time of writing this article the new structure was known, but the details of new procedures and relationships had not been finalized. The analysis is therefore based on an understanding of the pre-existing structure and system.

2. China Statistical Yearbook 1997 (Beijing: China Statistical Publishing House, 1997).Google Scholar

3. TWh: one Terawatt hour = 109 Kilowatt hours.

4. Yang, Ming and Yu, Xin, “China's power management,” Energy Policy, Vol. 24, No. 8 (1996), pp. 735–757.CrossRefGoogle Scholar

5. Ibid.

6. Ministry of Energy, Energy in China 1992 (Beijing: Ministry of Energy, 1992)Google Scholar; China Electric Power Information Centre, Electric Power Industry in China 1997 (Beijing: Epoch Printing Co., 1997).Google Scholar

7. This is equivalent to 1,250 MW per month, or 20 major power stations per year.

8. See Power in Asia, No. 244 (1998), p. 2.Google Scholar

9. For systematic descriptions and analyses of China's power sector at this time, see Yang, Ming and Yu, Xin, “China's power management,”Google Scholar and World Bank, China Power Sector Reform – Towards Competition and Improved Performance, Report Number 12929-CHA (Washington, D.C.: World Bank, 1994).Google Scholar

10. For example the China Huaneng Group has interests in power generation.

11. Participants excluded from the SPCC include the power companies of Inner Mongolia, Guangdong, Tibet and Hainan. Partly within the SPCC is the China Huaneng Group. China Electric Power Information Centre, Electric Power Industry.

12. See Yang, Ming and Yu, Xin, “China's power management,”Google Scholar and World Bank, China Power Sector Reform.Google Scholar

13. The Electrical Power Law of the People's Republic of China, adopted by the 17th Session of the Standing Committee of the Eighth National People's Congress on 28 December 1995, effective from 1 April 1996.

14. Regulations on Electric Power Supply and Consumption, promulgated by Decree No. 60 of the State Council on 17 April 1996, and effective as from 1 September 1996.

15. Law of Protection of Consumer Rights, adopted by the National People's Congress on 31 10 1993Google Scholar, effective from 1 April 1994.

16. The Electrical Power Law, article 1.

17. Ibid., article 26.

18. Regulations on Electric Power Supply and Consumption, article 23. The term “unjustified” is not explained but it presumably provides the supplier with grounds for refusal to supply if the demand for power exceeds or is in close balance with supply. It is thought to be aimed at permitting suppliers to evade the potential impact of large new users on the electricity balance in a situation of shortage of generation or transmission capacity.

19. Unfortunately, there is no precise definition of “national standards,” but it appears that the provision is aimed at encouraging uniform standards for electricity quality, bearing in mind there are a number of unconnected grids. In some areas, voltage fluctuation remains a problem, and legislation clearly places the obligation to remedy the problem with the supplier. The implication (although not directly expressed in law) is that the consumer whose electricity does not meet the national standard should receive improved quality of service at no extra cost.

20. The Electrical Power Law, article 28.

21. One of the causes of such fluctuations is the lack of spinning reserve in the system so that when a power station is started up, the system voltage is liable to fluctuate wildly. In rural areas the poor quality of the generating plants is often to blame.

22. The Electrical Power Law, article 59.

23. Law of Protection of Consumer Rights.

24. The Electrical Power Law, article 8.

25. Ibid., articles 11 and 35.

26. Ibid., article 34.

27. Yuhong, Zhao, “Contract law,” in Chenguang, Wang and Xianchu, Zhang (eds.), Introduction to Chinese Law (Hong Kong: Sweet & Maxwell Asia, 1997), pp. 235–274.Google Scholar

28. The pilot questionnaire survey has obvious limitations, particularly the size of the sample. The questionnaire, prepared by the authors, was aimed at domestic users. It was given to consumers in different parts of Beijing in an effort to reduce the small sample bias. The results obviously cannot be said to be fully representative, but they do provide some insight into the reactions of consumers to the changing industry.

29. For example, by changing the category or capacity of consumption, by exceeding the consumption quota, or through unauthorized modification of system management equipment. Regulations on Electric Power Supply and Consumption, articles 30 and 40.

30. Lubman, Stanley, “The future of Chinese law,” The China Quarterly, No. 141 (1995), pp. 1–21.Google Scholar

31. Clarke, Donald C., “The execution of civil judgements in China,” The China Quarterly, No. 141 (1995), pp. 65–81.Google Scholar

32. World Bank, China Power Sector Reform.Google Scholar

33. This analysis is based on interviews with officials from the State Planning Commission and the State Power Corporation.

34. See for example World Bank, China. Power Sector Regulation in a Socialist Market Economy, Discussion Paper No. 361 (Washington, D.C.: World Bank, 1997).Google Scholar

35. World Bank, Power Sector RegulationGoogle Scholar

36. International Energy Agency, Asia Electricity Study (Paris: OECD/IEA, 1997).Google Scholar

37. Price catalogues were available for Beijing, Tianjin, Zhejiang, Jiangsu, Shanghai, Xinjiang and Qinghai.

38. The absence of the “commercial” category does not imply the absence of “new” users of power paying high prices.

39. Hotels, schools, pipeline pumps and construction each form individual categories, as do different forms of lighting. A total of nine categories, all industrial, are subject to capacity charges. State Power Corporation.

40. State Power Corporation.

41. State Power Corporation of China, Corporate Brochure (1997).

42. Yang, Ming and Yu, Xin, “China's power management.”Google Scholar

43. Clearly SPCC is sole buyer outside the remaining independent provincial power companies.

44. Laibin-B and Changsha: contracts awarded under the “build operate transfer” provisions after open competition to EdF in 1997 and National Power in 1998 respectively.

45. World Bank, Power Sector Regulation.Google Scholar

46. But by the middle of 1998 it would seem that this opportunity had not been taken.