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Restructuring the Chinese Electricity Supply Sector - How industrial electricity prices are determined in a liberalized power market: lessons from Great Britain

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  • Pollitt, M.
  • Dale, L.

Abstract

In this paper, we begin by discussing the components of the price of industrial electricity in Great Britain, as an example of a fully reformed electricity market, where the market is roughly comparable in size to a reasonably large Chinese province. We go on to discuss the key actors in the liberalized electricity system in Great Britain, before unpacking each of the components of the price. We discuss the market determined elements first, then go on to introduce and discuss the regulated elements of the price before finishing with the central government determined price components. Our discussion covers the determination of the wholesale price, the retail margin, transmission charges, system balancing charges, distribution charges and environmental levies and taxes. In each of these cases we discuss the process by which they are determined (led by the market, the regulator, the central government or more than one) and the specific lessons for China. We conclude by emphasizing some of the high-level lessons on electricity price determination for China.

Suggested Citation

  • Pollitt, M. & Dale, L., 2018. "Restructuring the Chinese Electricity Supply Sector - How industrial electricity prices are determined in a liberalized power market: lessons from Great Britain," Cambridge Working Papers in Economics 1871, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1871
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    References listed on IDEAS

    as
    1. Karim L. Anaya & Michael G. Pollitt, 2017. "Regulating the Electricity System Operator: Lessons for Great Britain from around the world," Working Papers EPRG 1718, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Sioshansi, Fereidoon P., 2008. "Competitive Electricity Markets: Questions Remain about Design, Implementation, Performance," The Electricity Journal, Elsevier, vol. 21(2), pages 74-87, March.
    3. Green, Richard J & Joanne Evans, 2003. "Why did British electricity prices fall after 1998?," Royal Economic Society Annual Conference 2003 92, Royal Economic Society.
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    10. Pollitt, M.G., 1999. "A survey of the liberalisation of public enterprises in the UK since 1979," Cambridge Working Papers in Economics 9901, Faculty of Economics, University of Cambridge.
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    13. Newbery, D., 2017. "How to judge whether supporting solar PV is justified," Cambridge Working Papers in Economics 1715, Faculty of Economics, University of Cambridge.
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    Cited by:

    1. Newbery, D., 2019. "Strengths and Weaknesses of the British Market Model," Cambridge Working Papers in Economics 1917, Faculty of Economics, University of Cambridge.

    More about this item

    Keywords

    Chinese power market reform; industrial electricity price; electricity liberalization;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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