China takes big step in electricity system reform

China released documents on Monday on electricity sector reforms covering everything from pricing to setting up a national electricity futures market.

The new pricing system, which was piloted in Shenzhen and Inner Mongolia early this year, will be expanded to Anhui, Hubei, Yunnan, and Guizhou provinces and Ningxia Hui Autonomous Region, according to one of the six documents jointly published by the National Energy Administration and the National Development and Reform Commission, China's top economic planner.

The new pricing system aims to benefit power users, set up a cost-saving mechanism for power grid enterprises and promote the marketization of electricity.

China will establish electricity trading bodies that are "relatively independent" to promote interprovincial trade. Authorities will explore the possibility of a unified national electricity futures and derivatives market, according to the documents.

Power users who "meet the requirement for market access" can directly buy from power generation companies, the documents said.

China will gradually scrap government control of on-grid prices in areas with a mature electricity market, letting the market and consumers set the price, according to the documents. Endi