China’s power system institutional reform: development and optimization of transmission and distribution tariff

In May 2023, the National Development and Reform Commission (NDRC) issued the Notice on the Third Supervision Cycle of the Provincial Power Grid Transmission and Distribution Tariff and Related Matters (CHN: 关于第三监管周期省级电网输配电价及有关事项的通知). Establishing transmission and distribution tariffs (T&D tariffs) is important to China’s power system institutional reform. This is the third time the government has approved the T&D tariffs of various provinces. On the one hand, from October 2021, the government requires all industrial and commercial users to participate gradually in the power market, so the classification and structure of end-use electricity prices must be further optimized. On the other hand, China is building a new-type power system with new energy as the main body. Electricity prices need to reflect the multiple values of power resources more accurately, such as capacity reserve and ancillary services. This revision aims to fully address the problems mentioned above.