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Is China's electricity price cross-subsidy policy reasonable? Comparative analysis of eastern, central, and western regions

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  • Pu, Lei
  • Wang, Xiuhui
  • Tan, Zhongfu
  • Wang, Huaqing
  • Yang, JiaCheng
  • Wu, Jing

Abstract

Proper handling of the electricity price cross-subsidy is the key to reducing the power cost of industrial and commercial users and is also the key task of China's new round of power system reform. First, this paper analyzes the development history of China's electricity price policy and describes the problems faced by the government at different stages. Second, a cross-subsidy calculation model is established, and a method for calculating the scale and degree of cross-subsidy is proposed. Third, the concept of reasonable cross-subsidy is defined, and a method for calculating the reasonable cross-subsidy ratio is proposed. Finally, Jiangsu, Henan, and Qinghai provinces are selected as representatives of the eastern, central, and western regions of China to analyze whether the current China cross-subsidy policy is reasonable. The results show that, compared with the economically underdeveloped provinces of Henan and Qinghai, in Jiangsu province, where the economy is more developed, the residential and agricultural users have higher levels of cross-subsidy, but the ratio of reasonable cross-subsidy is lower. This shows that there is an unreasonable situation in China's electricity price cross-subsidy policy.

Suggested Citation

  • Pu, Lei & Wang, Xiuhui & Tan, Zhongfu & Wang, Huaqing & Yang, JiaCheng & Wu, Jing, 2020. "Is China's electricity price cross-subsidy policy reasonable? Comparative analysis of eastern, central, and western regions," Energy Policy, Elsevier, vol. 138(C).
    • Handle: RePEc:eee:enepol:v:138:y:2020:i:c:s0301421520300124
    DOI: 10.1016/j.enpol.2020.111250
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