Pilot Programme on Direct Sale of Power to Large Power Users Kicked Off

By Qin Yu

[email protected]

On March 29 2004, the China Electricity Supervisory Commission (CESC) and the State Development and Planning Commission (SDPC) issued the Purchase of Power Directly from Power Generation Enterprises by Power Users Pilot Tentative Procedures (the Procedures) to kick off a pilot programme on direct sale and purchase between power generation enterprises and large power users, including power dispatching enterprises. Over the past couple of years China has launched a new round of reform and restructuring for its power industry. In its April 2002 Plan for the Structural Reform of the Power Industry the State Council highlighted direct power sales as a key reform area. Until that time, while China had opened power generation to the market, power purchase and sales with end users remained monopolies of power grid enterprises. Since issuance of this circular, several provinces have started to run their own pilot direct power sale programmes. Such separate provincial practices have led central regulatory authorities to express concern that local direct power sale programmes may expand beyond their control and complicate the already very thorny issue of power industry reform in China. Against this backdrop, the Procedures were issued to regulate pilot direct power sale programmes so that they can be carried out in a systematic way and lessons learned before direct power sales can be promoted on a large scale when conditions are ripe.