This month China flipped the switch on a new electricity pricing model that treats all businesses as favorably as large industrial users while continuing to subsidize costs to residential and agricultural customers. The changes are intended to bring fairer and more transparent rates as well as more efficient distribution throughout the world's largest power grid.
In a notice released on May 15, the National Development and Reform Commission established the "cost plus reasonable profit" principle for calculating power transmission and distribution fees, breaking down the components of the total charges and allowing grids to pass through certain costs to users for the first time. The change should help the operators to calculate their costs more precisely, reasonably limit their profit margin, and boost investment efficiency.
