12 April 2002 – China approved Thursday the long-awaited reforms to the electricity industry in which it will split the China State Power Corporation [CSPC] into smaller power companies and electricity carriers which will break the CSPC monopoly in the generation and supply of power.

The State Development Planning Commission (SDPC) announced that the power plants of the CSPC will be regrouped under four or five smaller power companies. The Huaneng Power (Group) Corporation under the SDPC will become an independent
power generating company. The remaining power plants of the SDPC will be divided equally and formed into three or four new power companies.

The power grid owned by the CSPC will also be divided up between two newly founded power grid companies. The State Power Grid Corporation will establish five regional companies in north, northeast, northwest, east and central China. It will also manage the power grid in Tibet.

The Southern Power Grid Corporation will own the power grid in Guangdong and Hainan provinces in south China and in Yunnan Guizhou and Guangxi in southwest China.

The SDPC said the reorganisation of the power companies will be completed by the end of this year and that China would adopt new emission standards for power companies and give price incentives to the development of environmentally friendly energy.

The power companies will compete with each other in terms of price and clean power generation as they try to win contracts from power grid companies. The Chinese government will also intervene with the pricing of power supplies by grid companies that are in a monopoly position in the market.

A new State Power Regulatory Commission will be established to oversee the newly competitive electricity market. There will also be a pilot project established in which large industrial customers will be allowed to purchase electricity directly from power plants.

The break-up plan is consistent in its essentials with the outline given in early March by Zeng Peiyan, head of the State Development Planning Commission.