The New Power Reform is In Acceleration The First Provincial Power Grid Enterprise Was Established

Original text link: http://news.315.com.cn/20151208/100611976.html

According to the analyst, regional grid companies are expected to first benefit from the power sale-relating reform, while private capital actively participating in the services of the electricity use markets are also anticipated to benefit from the future reform.

The new power reform is accelerating after six major supporting documents are released.

Recently, Hunan Xinhua Power Supply Co., Ltd. was formally founded, becoming the first provincial grid company since the country has implemented the policies aiming to deepen the power system reform.

A week ago, right on the day when the six major supporting documents to the new power reform was released, Shenzhen Power Supply Bureau of China Southern Power Grid, China Merchants Property Development, China General Nuclear Power Corporation and other companies jointly established the first power supply enterprise with mixed ownership in China.

The analyst said that at present, all the power companies and the private capital participating in power distribution and sale markets are highly motivated. With the liberalization of power distribution and sale market, everyone is willing to win a share in this market. Regional grid companies are expected to benefit first from the power sale-relating reform.

The First Provincial Grid Enterprise Was Established

Grid Companies Participate in the Auction of Power Sale

On November 30, the six major supporting documents for the new power reform were released, mainly detailing the relevant problems including pilot reform on power transmission and distribution price, pilot power sales-relating reform, electricity market construction, opening up the power generation and use plan

Subsequently, as the new power reform continues accelerating, the electricity market experiences great changes.

The "Securities Daily" reporter learned that on December 4, funded by Xinhua Hydropower Co., Ltd., Hunan Xinhua Power Supply Co., Ltd. was formally established, becoming the first provincial grid enterprise since the country has implemented the policies of deepening the power system reform.

The company is held by Xinhua Hydropower Co., Ltd. in share, under its jurisdiction is 5 local power supply companies-Hunan Jin-Yuan Electric Power Group Co., Ltd., Liuyang Regional Electric Power Co., Ltd., Hunan Xiaoxiang Hydropower Co., Ltd., Hunan Xinqiao Electric Power Co., Ltd., Huayuan County Electric Power Supply Limited- mainly engaging in electricity investment, power transmission and distribution, power supply, power engineering, electrical power and mine integration, with the total assets exceeding RMB 1 billion. Its existing grids have the largest power supply capacity of more than 600,000kwh, and the total length of power transmission lines over 7000km, supplying power to the population of more than 700,000. The cumulative power supply during the period of the "Twelfth Five-Year Plan" reaches 8 billion kwh, with the annual power supply in 2020 reaching 3.55 billion kWh.

It is understood that, in 2007 Bureau of Comprehensive Development Ministry of Water Resources and Water Resources Department of Hunan Province jointly funded to establish Hunan Xinhua Hydropower Co., Ltd., engaging in clean energy development in Hunan, and operating the local power grid enterprises in city of Liuyang, Huayuan County, Dao County and other areas.

According to General Manger of Hunan Xinhua Power Supply Co., Ltd. Zhang Sishun, to meet the new-round power reform’s requirements, Xinhua Hydropower Co., Ltd. has separated from Hunan Xinhua Hydropower Limited in the grid business to establish Hunan Xinhua Power Supply Co., Ltd., and completed the industrial and commercial registration on November 6 of this year.

"This company does not have a very large power supply, mainly aiming to occupy a market share”, said a brokerage analyst declining to be named to the "Securities Daily" reporter. He said that during the early period of the power reform, the first move was made certainly by power supply companies owing such a management team and experiences. Now around the country, all power companies have already started to take action.

Shenwan Hongyuan Securities analyst Han Qiming believes that in the power sale markets, the main entities participating in the market competition are not grid companies, but the power sale companies under their grids, which have the same competitive position as other market entities. Grid companies join the auction of electricity sale, not affecting the users’ power utilization experiences in access to services, prices, information and other optimal comprehensive index. In fact, if the grid companies are not involved, the competition in a full range of electricity sales services cannot be driven.

The New Power Reform Is in Acceleration

Private Capital Is Introduced to Participate in the Power Distribution and Sale Business

In fact, the new power reform is in acceleration.

On November 30, right on the day when six major supporting documents of the new power reform were released, Qianhai Shenzhen FTA Power Supply Co., Ltd. (hereinafter referred to Shekou Power Supply Company) was established.

As a pilot city first implementing the power transmission and distribution reform, Shenzhen once again walks in the forefront of the reform.

This company is share-held and founded by Shenzhen Power Supply Bureau of China Southern Power Grid, China Merchants Property Development, Shenzhen Nengzhihui of China General Nuclear Power Corporation, Wenshan Electric Power and Shenzhen Qianhai through injecting RMB 100 million of funds, which will jointly develop the power distribution and sale business covering 280,000 square kilometers of Qianhai Shekou FTA.

It needs to mention that this is China’s first power supply enterprise with mixed ownership. In addition, Shenzhen Qianhai as a completely new development area, its power supply business belongs to a brand-new incremental power distribution one, consistent with the direction of opening up the incremental power distribution investment in the new power reform.

Inspector of Economic System Comprehensive Reform Division of National Development and Reform Commission Wang Qiang revealed that in terms of the pilot power sale-relating reform, the National Development and Reform Commission will soon approve Chongqing and Guangdong to implement the pilot power sale-relating reform in early December, to open up incremental power distribution network to social capital, establish power sale companies with the right to operate power distribution grids operator while allowing the social capital to establish independent power sale companies to carry out the sale business of electricity.

The above analysts also said that, the power supply companies previously owing the right to operate power distribution girds are the first ones capable of doing power distribution business well, which will be dominant power in the power supply area; the second ones are power generation enterprises, for example, some hydropower enterprises have relatively low costs, which may represent the pattern for private capital to cooperate with local power supply companies, like Shekou Power Supply Co., Ltd. described above; the third ones will be the companies engaging in electricity services.

"Currently, the market is very active in all aspects, indicating a great chance for the power distribution and sale markets". He also said that in the future, the state grid may also set up power sale companies.

Han Qiming also believes that the regional power grid companies are expected to firstly benefit from the power sale-relating reform, while the private capital actively participating in the services of electricity use market are also anticipated to benefit from the reform in future.