National Development and Reform Commission: Special Commission for Reform of Power Transmission and Distribution Established

It was learned from an agency close to the National Development and Reform Commission that the National Development and Reform Commission has established a “Special Reform Group for Power Transmission and Distribution Separation” to study and formulate separate plans for transmission and distribution and promote pilot work.

This year's government work report clearly puts forward “promoting the reform of the power industry”; the State Council has approved “Opinions on the Key Work of Deepening Economic System Reform in 2012”, stating that this year will “strengthen the reform of the power system and steadily carry out the separate pilot project for transmission and distribution”. According to the division of labor of the State Council, the task of electric reform is still entrusted to the National Development and Reform Commission, the State Electricity Regulatory Commission, and the National Energy Administration. The Development and Reform Commission takes the lead.

After the separation of the plant network and the separation of the main and the auxiliary, the electricity was improved into the “deep water area” transmission and distribution. However, this opinion is not uniform within the industry and government.

Supporters believe that the separation of transmission and distribution will help to clarify the cost of transmission and distribution and form a reasonable electricity price. If there is an investment, distribution, or sale in one company, there are a large number of cross-subsidies and related transactions between each link, and the cost structure of each link is difficult to distinguish. From the perspective of business efficiency, the profitability of each link after the separation of transmission and distribution is clear at a glance.

At present, domestic independent transmission and distribution tariffs have not yet been introduced. The transmission and distribution prices are the difference between the purchase price and the sales price between the sales price and the on-grid price. The viewpoint of supporting the separation of transmission and distribution is that this accounting method can hardly reflect the true cost of the power transmission and distribution link and is not conducive to the further promotion of power market reform.

Opponents believe that the separation of transmission and distribution will form new monopolies, increase transaction costs and regulatory difficulties, and even affect power dispatch and supply security.

A power expert told the reporter: “On the theoretical level, research on transmission and distribution separation has been very thorough. We have learned from both foreign experience and domestic practice. Separate transmission and distribution involve financial separation, separation of assets, and separation of personnel. There is no strong push by the top executives of the State Council. Difficult to implement."

The State Electricity Regulatory Commission, as the regulator of the power industry, is an advocate of the reform of the power system. According to the electricity supervision and management work arrangement of the SERC in 2012, this year will “develop a pilot program for the comprehensive reform of the transmission and distribution system to promote the relevant pilot work”.

The former vice chairman of the State Electricity Regulatory Commission, Ruan Bingren, is a supporter of separation and distribution. He believes that “transmission belongs to a natural monopoly environment, and it should be independent, perform certain public-welfare functions, and be strictly supervised by the state. The allocation of power supply should be liberalized, and multiple competitions should be implemented. If the transmission and distribution do not separate, they cannot truly verify the distribution. Electricity costs cannot be reformed."

Although the transmission and distribution are separately included in the power reform schedule, this does not mean that the separation of factories and networks and the separation between the main and the auxiliary have been completely completed. According to industry sources, "Some aspects have even reversed."

In 2010, when the State Grid Corporation conversely purchased Xu Ji and Pinggao, two electrical equipment manufacturing companies, they were opposed to the idea of ​​"separation between the main and the auxiliary." In the separation of main and auxiliary reforms in October last year, the two companies have not been separated from the power grid.

In accordance with the “Separation of Main and Auxiliary Projects”, the subsidiary companies such as the State Grid Corporation of China, the provincial (regional) power grid companies, the survey and design, thermal power construction, and hydropower construction and repairing companies have been separated from the establishment system and restructured with the four central power design and construction companies. The formation of China Power Construction, China can build two major central enterprises.

However, this type of reform is not a true marketization. During the “two sessions” this year, Zhang Guobao, former director of the National Energy Administration, told this reporter: “This separation mode is not ideal. In the past, power generation companies could bid for multiple construction companies and now they can only face two companies. In enterprises, competition has weakened and new monopolies have been formed."

At the "factory and network separation" level, the power generation assets of grid companies have become increasingly large in recent years. According to public information, the State Grid Corporation of China owns three wholly-owned subsidiaries, namely State Grid Xinyuan Holdings, State Grid Energy Co., Ltd., and State Grid Xinyuan Hydropower Co., Ltd., which are involved in thermal power and hydropower.

An expert who has long been engaged in research on electric power reform believes that “the state department should further consolidate the results of the separation of factories and networks and conduct a thorough investigation on the power generation assets owned by power grid companies to prevent the reforms from being lost.”

related news:

The separation of main power and auxiliary power from the establishment of the two major power auxiliary groups was temporarily completed. The separation of main power and auxiliary power from the beginning of 2002 was finally completed. On September 29, the State-owned Assets Supervision and Administration Commission of the State Council convened the unveiling of China Power Construction Group Co., Ltd., China Energy Construction Group Co., Ltd. and the separation of power grid companies, and officially announced the establishment of two major power auxiliary groups in China.

The consolidation scope of this power auxiliary business is the survey and design enterprise owned by the State Grid Corporation of China, the China Southern Power Grid Corporation and the provincial (regional) power grid companies, thermal power generation, hydropower construction companies, and power repair companies; and the current China Power Engineering Consulting Group supervised by the SASAC. The company, China Hydropower Engineering Consulting Group Corporation, China Water Conservancy and Hydropower Construction Group Corporation, China Gezhouba Group Corporation.

The specific merger method is that the two power grid companies Hebei, Jilin, Shanghai, Fujian, Jiangxi, Shandong, Henan, Hubei, Hainan, Chongqing, Sichuan, Guizhou, Qinghai, and Ningxia, and other 14 provinces (autonomous regions, municipalities) and other subsidiary companies Units and hydropower construction group, hydropower consulting group restructured to form China Electric Power Construction Group Co., Ltd.; two power grid companies Beijing, Tianjin, Shanxi, Liaoning, Heilongjiang, Jiangsu, Zhejiang, Anhui, Hunan, Guangdong, Guangxi, Yunnan, Shaanxi, Gansu Reorganized with subsidiary companies of 15 provinces (autonomous regions and municipalities) including Xinjiang, Gezhouba Group and Electric Consultant Group, and established China Energy Construction Group Co., Ltd.

The newly formed two major power auxiliary groups will become comprehensive power construction group companies with project-based general contracting, project management, design, construction, and repair operations as their main business.

According to the SASAC, the major significance of the reform and reorganization of the main grid and the auxiliary grid is that the first is to promote the development of China's power industry. Implement the separation and reform of main and auxiliary power grids and reorganize power construction teams with larger scale, more concentrated resources, more obvious advantages, more reasonable industrial chain, and stronger overall strength, so as to better meet the needs of China's power industry structural adjustment and industrial upgrading. Further improve the level of power construction and promote the healthy development of the power industry.

The second is to help adapt to changes in the power market. The implementation of reform and reorganization will help electric power design and construction companies make full use of existing resources, optimize and adjust their business structure, accelerate technological innovation and industrial transformation, actively adapt to the development needs of the new situation, and improve their market resilience and ability to resist risks.

The third is to help improve the overall competitiveness of China's power construction sector. Through the separation and reorganization, the integration of design and construction companies can effectively promote the optimization of design, construction technology upgrades, technical exchanges and integration, greatly enhance the company's comprehensive competitiveness and ability to open up the international market, and accelerate the realization of the "going out" strategy.

The fourth is to help solve the problems left over by history of power auxiliary businesses. Through reform and reorganization, we will consider the auxiliary power grid business units and the four central power design and construction companies as a whole, coordinate and balance the interests of all parties concerned, and gradually solve the problems left over by history.
Separation of Main Grid and Secondary Grid Allegedly Caused a New Monopoly Actually, as early as 2002, the state introduced a power system reform plan and clarified the four major reform tasks of “separation of plant and network, separation of main and auxiliary facilities, separation of transmission and distribution, and online bidding”. The subsequent "separation of plant and network" plan was basically implemented, and the second step of the reform, "separation between the main and auxiliary," was frustrated in the game of interests of all parties.

In 2004, the first reform plan for separation between the main and the auxiliary failed because of the “electricity shortage” at that time. Subsequent multiple versions of the proposal were hampered by the lack of consensus among the ministries due to high resistance. In 2010, the separation of the main and auxiliary reforms resumed. According to the power system reform plan, the separation between the main and auxiliary companies is based on the separation of the subsidiary companies, including the survey, design, construction, and repair of the two major power grid companies, into a comprehensive power construction group integrating design and construction.

For the prolonged power reform, Lin Boqiang, director of the Xiamen University Energy Economic Research Center, also sighed: “The factory network was divided at that time, and it was the easiest to split the number of main and auxiliary units. It took eight years to see how much power system reform is. difficult."

The problem of creating new monopoly legacy Although the purpose of the power system reform is to get rid of the monopoly, industry experts believe that the establishment of the two major auxiliary industries, the "Megas", will bring about a new monopoly. From the data point of view, China Electric Power Construction Group Co., Ltd. in 2010 operating income reached 160 billion yuan, total assets of 196 billion yuan; China Energy Construction Group Co., 2010 operating income reached 110 billion yuan, total assets of 120 billion yuan.

Zhang Yanlin, research director of China Investment Consulting Co., Ltd. pointed out that the two major sub-industry groups formed by the separation of the main and auxiliary reforms are also monopolized in the industry, which is inconsistent with the goal of “introducing competition and breaking the monopoly” in the electric power system reform. If the separation of power main and auxiliary reforms merely transforms the grid monopoly auxiliary business into a new auxiliary group and continues to monopolize, such a reform is of little significance.

In yesterday's listing ceremony, the speech of Wang Yong, the director of the SASAC, actually revealed the status of the two affiliated industry groups as "dominant." He said that after the reform and reorganization, the industrial concentration and scale strength have been greatly enhanced, far exceeding any power construction companies.

In addition, Lin Boqiang believes that the integration of coal and electric power that the government encourages and other industries that the power generation and power grids are doing are not auxiliary businesses. How to define the main and auxiliary will also become a major issue.

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