Reconsideration on Several Essential Issues in Electricity Market Construction

Polaris Power Grid Online News: In 2009, the author of this article wrote an article entitled “Several Essential Issues in the Construction of the Electricity Market” together with Director of the Market Supervision Department of the China Electricity Regulatory Commission Liu Baohua and Dr. Zhao Xueshun, together with the “Research and Reference” of the State Electricity Regulatory Commission. The publication has caused some repercussions in the industry. Two years later, Mr. Zhu Chengzhang (the former deputy director of the Department of Policy and Regulation of the Ministry of Energy) wrote a long letter to the author specifically on the article. He put forward a number of different opinions on several issues in the article, combined with Mr. Zhu Lao’s opinion. The author has conducted in-depth rethinking of these issues, and now I would like to record some of my ideas for criticism by the industry. The understanding and definition of the attributes of electric power products and services on the attributes of electric energy fundamentally affect the choice of electric power industry management model and determine the necessity and rationality of reform and construction of the electric power market. Therefore, this issue is fully discussed. It is necessary. For a long time, many occasions, including textbooks on economics, have used electricity as a representative of quasi-public products. The author believes that this can not withstand scrutiny. First of all, from the theoretical definition of public goods or quasi-public goods, electric energy is almost completely inconsistent with its characteristic definition. Public goods are items that can be shared by members of society. Strict public goods are non-competitive and non-exclusive. Non-competitiveness means that the consumption of public goods by a person does not affect the consumption of the product at the same time and the benefits it derives from it. That is, at a given level of production, it is provided for another consumer. The marginal cost of coming is zero. The so-called non-excludability means that when someone consumes a public good, it cannot exclude other people from using it (regardless of whether they pay for it), or the cost of exclusion is high. According to these two characteristics, public goods can be divided into three categories: The first category is pure public goods, that is non-exclusive and non-competitive at the same time; the second type of public goods is not competitive in consumption, but can be more easily done. Exclusivity is called club goods; the third type of public goods is just the opposite, that is, it is competitive in consumption, but it cannot be effectively excluded. It is called a common resource or a common pond resource item. The latter two are collectively referred to as quasi-public goods, that is, non-exclusive and non-competitive public goods. Quasi-public goods are generally congested, that is, when the number of consumers increases to a certain value, the marginal cost will be positive, rather than the pure public goods, increase one's consumption, and the marginal cost is zero. . When a quasi-public goods reaches a crowded point, each additional person will reduce the effectiveness of the original consumer. In addition to the above two characteristics, public goods are also mandatory and gratuitous: mandatory means that public goods are automatically provided to all or a certain range of all members of society, regardless of whether you are willing; unpaid means that consumers may not consume these items. Pay a fee, or pay only far less than the marginal or marginal cost decision. The above four characteristics, when compared to the power delivered to the user's hands, are clearly not established: First, the power is precisely an exclusive, long-term current power cuts in our country is a typical example, when the power When the demand exceeds supply, some users have the right to use electricity. The other part of the user's electricity rights must be deprived. Secondly, electricity is competitive. Power products and services, from electricity and capacity to auxiliary services and transmission rights, can all be Convenient, low-cost segmentation and metering ensures that each user's boundaries are clear; at the same time, electricity is obviously also non-mandatory and compensatory. Even with the standard of quasi-public goods, that is, limited non-competitiveness and partial exclusivity, electricity itself is not available. However, if we look at the production, distribution and distribution of electric energy, we find that in the circulation of electric energy, that is, transmission and distribution services and electric power reliability still have certain quasi-public goods characteristics: when there is no obstruction in the transmission line, when the electricity When reliability is not threatened, all users of the same system can enjoy this service and utility without marginal cost or low marginal cost, but marginal costs will quickly and positively increase when a resistance plug or reliability event occurs. Even so, along with the development of modern information and metrology technologies, the advancement of economic theory, and the maturing practices in transmission rights, auxiliary services, and reliable electricity price products, the quasi-public goods attributes of electric energy have been reflected to some extent. On the other hand, the commodity properties of electricity actually exist naturally. In the early days of power generation, the production and use of electricity was dominated by the same location, and its buying, selling, and consumption mechanisms were not much different from other goods. With the development of the scale of electricity use, off-site production, long-distance transmission, and electrical isolation have gradually become the mainstream of the power production and distribution model. With the change of this model, the power industry’s production relations have shifted from private local monopoly to the mainstream. The monopoly of monopoly is the mainstream change, and the property of electricity is gradually obliterated, becoming a special item that is strictly controlled or franchised by various governments. Usually we talk about the special nature of electricity, from the non-economic storage characteristics, production and supply synchronization completion characteristics, special network logistics transmission characteristics, as well as the external characteristics of production and use units interact with each other and other physical characteristics to find the reasons. However, in reality, it is not the physical characteristics of electricity that determine its need for government control, but the most extensive penetration characteristics and irreplaceable characteristics of electricity that determine it is naturally viewed and used by various governments. Just as money and nature are not gold and silver, gold and silver are natural currencies. When electricity becomes an irreplaceable item that penetrates into every life and production process, the governments of various modern countries will naturally take over their financial functions. Therefore, after the commodity property of electric energy has been obliterated for a long period of time and in most areas, it is actually not the property of public goods but the property of financial instruments. With regard to the liberalization and privatization of the power industry, which has been known as an industry for more than 100 years in the power industry, its industrial organization structure and production relations have undergone two major changes, and the power industry has become the foundation of the modern national economy. Its own reforms profoundly reflect the changes in the entire political and economic situation. Generally speaking, the general trajectory of the transformation of the power industry's production relations is from private ownership, free development, and small-scale monopoly to state-owned, comprehensively controlled, large-scale monopolies, then to private ownership, partial control, and large-area competition. However, each country has its own differences. The first round of nationalization was mainly in Europe. The United States and Japan did not have nationalization. However, all countries have implemented government intervention and comprehensive control of the power industry without exception. The franchise, so a common result is the annihilation of the property of the electric power. In the second round of liberalization, the key words are deregulation, marketization of transactions, and price liberalization. Privatization can only be considered as an alternative problem. The following diagram briefly summarizes the directions and states of major countries in the two dimensions of liberalization and privatization in this round of power reform. It can be seen from the figure that most countries are mainly free along the horizontal direction. The direction of development is on the move; Britain, Australia (Victoria) and other developed countries, as well as Argentina, Chile, Peru and other developing countries have gone the most thorough in two dimensions. The trajectory and status of China are not marked. If the target is to be marked, a small V-word should be drawn above France in the upper left corner, because we only took a small step in the competitive structure and passed through all the points of production. In the past few years, the country has retreated to its pre-reform state. In the course of this round of liberalization, many countries have also realized that power reform does not necessitate thorough privatization and liberalization. The power industry can continue to be state-owned. Of course, it cannot be said that the power industry can only be state-owned. From the above figure, it can be seen that privatization and liberalization (marketization) are not mutually predicated or mutually restrictive, but are almost regarded as irrelevant two things, and can only be a dimension of liberalization (marketization). Advance in parallel. From the above figure, we can see that there is no significant difference between developed and developing countries. The developed countries are also very conservative, such as France. Developing countries are also very radical, such as Chile. At the same time, according to the information I understand, the only recognized failure in power reform is California. However, the way California improved its mistakes is not to stop the reforms or to revert, but to improve the market to continue.

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