State Grid corp is at center of reform

The central government combined the former State Electricity Regulatory Commission with the National Energy Administration in March in a move considered to mark the restart of power industry reform.

The State Grid Corp of China, the country's largest utility, became the center of the reform because of its dominant role in the power market.

The State Grid buys electricity from power generation companies, and then distributes it to users. The company has long monopolized the market, being an electricity transmission provider and power distributor.

However, a senior official said whether to split the State Grid is not a standard for, or target of, power industry reform.

"The standard should be to improve productivity," said Zhang Guobao, former director of the National Energy Administration under the National Development and Reform Commission, during an interview with Xinhua News Agency.

He said separating the company cannot break the monopoly.

"The electricity pricing mechanism is an important part of power industry reform, but it belongs to the country's pricing reform rather than energy industry reform," he said. "Other than that, whether there is a need to separate the State Grid is still under discussion."

Liu Zhenya, general manager of State Grid, said recently that an electricity pricing mechanism, not the grid, is essential for power reform.

Xie Kechang, vice-president of the Chinese Academy of Engineering, said: "Any reform has to be done based on the safe, stable and economic operation of the grid."