**I. Electricity Management, Regulation, and Supervision**
The government's role in managing the power sector is a dynamic process that has evolved over time. At different stages, the focus of government involvement in electricity management, regulation, and supervision has varied. These three concepts are closely related but have distinct meanings. In general, "management" refers to the broader administrative actions taken by the government toward companies or industries. In the early stages of power development, when electricity was not yet part of a large-scale network, the government’s approach was similar to that of managing other goods—largely non-interventionist.
As electricity became more widespread and essential to the economy, its importance grew, and the government began to exert greater control. The traditional model separated government from enterprises, with the enterprise acting as an extension of the state’s will. While direct interference was limited, the government maintained influence through key areas like pricing, access, and distribution. This period was characterized by planned regulation, where the government aimed to guide the industry’s growth and ensure public interest.
However, this system had inherent weaknesses. Enterprises lacked internal motivation to improve efficiency or reduce costs, leading to inefficiencies and high prices. By the 1980s and 1990s, many developed countries faced stagnation in power development due to overcapacity and rising costs. This prompted calls for reform, leading to the emergence of modern regulatory systems that emphasized market competition and fair practices.
Reforms over the past two decades have reshaped the electricity market, redefining the relationship between the government, enterprises, and the market. Regulatory bodies now focus on ensuring market fairness and order, allowing prices to fluctuate while maintaining oversight. This shift is often referred to as "deregulation," aiming to maximize the role of the market while ensuring stability.
Regulation, as a method to support market competition, must be based on law and operate independently. Regulators act according to established rules, not policies, ensuring transparency and fairness. They monitor market players, enforce regulations, and promote equitable competition. Independence is crucial, as it allows regulators to act without political interference, ensuring professional judgment and long-term stability.
**II. Sources of Regulatory Functions**
Establishing a modern, independent regulatory system is a complex process. In environments where government control still dominates, the sources of regulatory functions need careful consideration. Based on global experiences and China’s own reforms, regulatory agencies should derive their authority from three main areas.
First, they should separate from general government management. Under traditional models, the government handled both macro-level planning and market supervision. After reforms, clear divisions are needed to ensure that regulatory agencies can operate independently. This includes transferring rule-making powers to them, allowing the market to function more efficiently.
Second, regulatory functions must emerge from market development itself. As markets evolve, new challenges arise that require updated rules and oversight. For example, establishing fair trading mechanisms, preventing market risks, and ensuring transparency are all critical roles of regulators.
Third, the needs of market participants shape regulatory priorities. Issues such as unclear interfaces between power generation and transmission have led to the creation of specific regulatory frameworks. Through measures like information disclosure and joint meetings, regulators help maintain order and fairness in the market.
**III. The Concept of Regulation and Main Approaches**
Regulation is not an end in itself but a tool for effective governance. The guiding principles of the "Twelfth Five-Year Plan" emphasize the need for a scientific regulatory approach. To achieve this, regulators must respect market mechanisms, ensure fairness, and act transparently.
Key aspects of improving regulation include:
1. **Market Access**: Ensuring equal opportunities for all participants, whether through registration, filing, or necessary licenses.
2. **Rule-Making**: Developing stable, fair, and balanced rules that reflect market needs.
3. **Evaluation Mechanisms**: Monitoring industry performance, providing feedback, and identifying areas for improvement.
4. **Referee Mechanisms**: Acting as impartial judges, enforcing rules, and resolving disputes effectively.
By focusing on these areas, regulators can foster a competitive, efficient, and fair electricity market that benefits all stakeholders.
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