first steps in power sector reform: the case of china’s guangdong province

Utilities Policy 11 (2003) 169–183www.socscinet.com/bam/jup

First steps in power sector reform: the case of China’s GuangdongProvince

Philip Andrews-Speeda,∗, Stephen Dowa, Andreas Oberheitmannb, Bruce Ramsayc,Victor Smithd, Bin Wei e

a Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee, Dundee DD4 1HN, UKb Rheinisch-Westfalisches Institut fur Wirtschaftsforschung, Hohenzollernstrasse 1-3, D-45128 Essen, Germany

c Electronic Engineering and Physics Division, School of Engineering, University of Dundee, Dundee DD4 1HN, UKd Foster Wyatt, 14 The Mall, London SW14 7EN, UK

e Strategy and Planning Division, SP Power Economic Research Center, 1 Ertiao, Baiguang Road, Beijing 100761, China

Received 20 November 2002; received in revised form 10 May 2003; accepted 12 May 2003

Abstract

Governments planning reform of their country’s electrical power sector frequently receive recommendations to move in a singlestep to a market with a compulsory pool and a single buyer. In many developing and emerging economies such a first step is likelyto carry an unduly high risk of failure for a range of technical, economic, legal and political factors. This paper arises from aconsultancy project in Guangdong Province, China, and proposes a sequence of reform which includes two intermediate steps tobe completed before the introduction of a compulsory pool: (1) efficiency improvements and cost reductions with no market and(2) a transition wholesale market. 2003 Elsevier Science Ltd. All rights reserved.

Keywords: Electricity; Competition; Regulation; China

1. Introduction

Many governments around the world are contemplat-ing, planning for or embarking on the liberalisation ofnational electrical power sectors. The programmes forreform proposed to governments of transition anddeveloping countries follow a well-trodden path begin-ning with a state monopoly, and moving towards a com-pulsory pool with single buyer, through an increasinglycompetitive wholesale market to reforms aimed atincreasing competition in the retail market and possiblyto eventual bilateral trading (Hunt and Shuttleworth,1996; Shao et al., 1997; Berrah et al., 2001; McEl-downey, 1992; Office of Gas and ElectricityMarkets/Department of Trade and Industry, 2002). Thisapproach bases its legitimacy on the perceived success

∗ Corresponding author. Tel.:+44-1382-345178; fax:+44-1382-322578.

E-mail address: [email protected] (P. Andrews-Speed).

0957-1787/03/$ - see front matter 2003 Elsevier Science Ltd. All rights reserved.doi:10.1016/S0957-1787(03)00046-8

of power sector liberalisation in a small number of casesin north-west Europe, Australia, Canada and LatinAmerica (e.g.Holmes, 1992; Beesley, 1994; Shao et al.,1997). Most of these success stories were blessed withrelatively favourable initial sector and economic con-ditions, including some or all of the following:

� A surplus of generating capacity;� A robust transmission and distribution network;� Relatively strong legal, institutional and political

frameworks;� Relatively cheap feedstock;� A small to modest size of population;� A relatively successful economy.

If most or all of these conditions prevail, the task ofembarking on the reform of the electrical power sectormay indeed be relatively straightforward, although theexperience of California is a salutary lesson that localconditions must always be taken into account (Kahn,2002).

170 P. Andrews-Speed et al. / Utilities Policy 11 (2003) 169–183

China is a large and diverse country experiencingrapid economic growth and undergoing a transition froma planned economy to a market economy. In most partsof the country few, if any, of the conditions listed aboveare met. It is the contention of this paper that the govern-ment should proceed with caution when embarking onthe reform of the power sector in order that some ofthese deficiencies may be addressed and the risk of fail-ure reduced. The province of Guangdong was chosenbecause one of the project sponsors, the State Develop-ment Planning Commission, was particularly keen toexamine the options for power sector reform in a prov-ince with a high rate of growth of demand for powerand rapidly rising prices. At the same time, the govern-ment of the Guandong Province itself was also consider-ing how to reform the industry.

The first two sections of this paper provide back-ground information to the power sector in China and inGuangdong Province. The next section presents key con-siderations for the restructuring of the industry and thedevelopment of a market in electrical power, with parti-cular reference to Guangdong. The focus is on the indus-try players and how they may interact in a market. Equ-ally important issues such as the problems of regulationin China and the social dimensions of sector reform arenot examined. The final sections describe the proposedevolutionary programme of reform recommended forGuangdong involving four steps:

Step 1: Efficiency and system capacity improvements toremove major system constraints and to reduce costs, butwithout the use of market forces;Step 2: A transition wholesale market which introducesmarket forces to part of the market;Step 3: A mandatory pool with a single purchasingagency allowing the expansion of wholesale compe-tition;Step 4: A multi-provincial market which extends thewholesale market beyond Guangdong Province.

Though designed specifically for Guangdong, webelieve that many aspects of this approach are applicableto other transition and developing economies where theinitial conditions for reform of the power sector are notas favourable as in those developed countries which areheld up as models.

2. China’s power sector: structure and recentdevelopments

Since 1997 China’s power sector has been dominatedby the vertically-integrated State Power Corporation ofChina (SPCC) which emerged from the Ministry of Elec-trical Power. The SPCC is a holding company whichowns most of the transmission and distribution infra-

structure through its ownership of nearly all the Provin-cial Power Companies. It plays a key role in planninginvestment by the subordinate entities, and in planningpower supply and demand. The state company buildsand operates the long-distance high-voltage grids,through the State Grid Construction Company, managesthe transfer of power between major grids, and investsin some large-scale hydro-electric projects (Andrews-Speed and Dow, 2000).

The subordinate Provincial Power Companies are alsolegal entities. To them falls the major responsibility forinvesting in and managing power generating capacity,the construction and management of the provincial andlocal transmission and distribution networks, despatch ofpower plants, the short-term balancing of supply anddemand, and, through the local supply companies, theservices to consumers. Investment in power plants alsotakes place at city, county and municipal levels. Indeednational generating capacity has grown from 87 GW in1985 to 350 by the end of 2002. It can therefore be seenthat generating plants are owned at four levels withinthe SPCC, all of which are also involved in either trans-mission or in distribution and supply. The starting pointfor liberalisation is complicated by this high incidenceof vertical integration.

A number of important Chinese enterprises lie outsidethe formal structure of the State Power Company. Theseinclude a number of Provincial or Autonomous Regionpower companies such as those in Guangdong, InnerMongolia, Hainan and Tibet, as well as a number ofquasi-independent power producers such as the Huanengand Guohua Groups.

Consumer prices are still controlled by the pricingbureaus at national and provincial levels, but the mainpriority of this price regulation seems to have been moreto restrain end-user prices rather than to ensure thatenough funds are available for investment in generatingcapacity and transmission and distribution infrastructure(Andrews-Speed et al., 1999).

Since the reform of government and state companiesin 1998 (Andrews-Speed et al., 2000) a general policyfor reforming the nation’s electricity industry has beenfrequently restated, and a variety of measures have beendrawn up and implemented, albeit in a piecemealfashion. Although these measures led to some improve-ments in the performance of China’s power sector, theydid not amount to a sustained programme of reform.Firstly there appeared to be no overall long-term stra-tegic plan for the reform, other than in very generalterms. Second, the reforms seemed to be driven more bythe State Power Company than by the central govern-ment.

During the year 2000, the issue of electricity reformrose up the agenda of both national and provincialgovernments. In the summer, at the same time as thisproject was taking place, the Governor of Guangdong

171P. Andrews-Speed et al. / Utilities Policy 11 (2003) 169–183

Province appointed a Working Group to examineurgently the options for reform of the power sector. Theelectrical power crisis in California led the State Councilto declare a moratorium on power sector reform in Chinaat the end of 2000. In March 2002 the State Councilissued its plan for the first stages of reform of China’spower sector which comprised the following mainelements:1

� The redistribution of generating assets into five “ inde-pendent” companies.

� Most of the transmission and distribution infrastruc-ture would be retained by the State Power Companyexcept for the South China Grid.

� Markets would be developed across 5–6 separateregions of China.

� A National Electric Power Supervision Commissionwould be established under the State Council to for-mulate market rules and to regulate the developingmarkets.

One year later, the five generating companies and thesupervision commission have been established, but littleelse has been achieved and the shape and rules governingthe future markets are far from clear.

3. Main features of the electrical power sector inGuangdong Province

3.1. Economic development and the growth of thepower sector in Guangdong

With a GDP of Yuan 960 RMB billion,2 Guangdongcontributed 11% of total Chinese Gross Domestic Pro-duct in 2000, and is China’s most prosperous provincewith a per capita GDP of Yuan RMB 12,900 RMB.3 Theper-capita electricity consumption in Guangdong was1780 kWh in 2000, well above the Chinese average of1054 kWh. This reflected the continuing importance ofenergy-intensive industries, such as the chemicals andconstruction, as well as the rising disposable incomes ofthe private households resulting in higher utilisation rateof electrical appliances such as air-conditioning.

Guangdong Province experienced major power short-ages in the 1980’s, which triggered a massive pro-gramme of investment in generating capacity. In the tenyears from 1985 the installed generating capacity of theprovince increased from about 3 GW to more than 22GW by 1995. At the same time energy efficiencyimprovements in the 1990’s, a short-term decline in

1 “The Electrical Power Reform Scheme” , issued by the GeneralOffice of the Secretary of the State Council on 5th March 2002.

2 US $ 1.00 is equivalent to about Yuan 8.3 RMB.3 The mean per capita GDP in China is about Yuan 7,050 RMB.

economic development since the Asian financial crisisin 1997, and a growth of the less energy-intensive ser-vice sector led to an easing of the power supply situationby 1999. By 2002 installed generating capacity exceeded33 GW but power shortages were returning as economicgrowth picked up.

3.2. Industry structure

In the year 2000 the electricity industry in Guangdongwas dominated by the provincial company—GuangdongElectric Power Holding Company (GEPHC)—but therewere a number of other state companies involved in thegeneration of power (Fig. 1).4 GEPHC was owned bythe provincial government. It lay entirely outside theState Power Corporation, giving the provincial auth-orities greater control over the power sector. GEPHCwas a vertically-integrated company. It owned somegenerating plant, it owned all the transmission infrastruc-ture in the province, and it owned most of the distri-bution networks. In most cases it was also the supply

Fig. 1. Summary of institutional relationships in the Guangdongpower sector in the year 2000.

4 Since the year 2000, the government of Guangdong Province hasembarked on a programme of restructuring of the provincial powerindustry which is still in progress. The description provided in thepaper refers to the structures and processes in place in 2000.


company. GEPHC was the sole buyer of power producedby other generators, and the controller of power‘ imported’ from other provinces.

GEPHC had been set up as a holding company witha number of operating units. The main part of the com-pany was responsible for generation, imports of power,dispatch, and network management. The lower layers ofthe holding company were the municipal companies andthe county companies, which were operating units andnot separate wholly-owned legal entities. These wereresponsible for some small-scale generation and localdispatch, but their key role was to act as the supply com-panies. There were some 21 municipal companies and53 county companies.

In addition to these supply companies, some geo-graphical areas of Guangdong were served by wholesalecounty companies. Whilst the wholesale county compa-nies served a relatively small proportion of demand, theywere nonetheless important as they were located entirelyoutside the GEPHC. The wholesale county companies,effectively owned by their respective county govern-ments, were the result of county governments estab-lishing their own local power networks. They were localvertically-integrated companies. Typically the compa-nies had been established to service remote areas. As theprovincial network had developed, such local networksbecame interconnected. The wholesale county compa-nies remained in place, in some cases owning their owninfrastructure, and where their local generating capacitywas insufficient to meet demand the company simplypurchased its excess needs from the GEPHC.

In the year 2001, the provincial government separatedGEPHC into two companies: the Guangdong GenerationAsset Management Company and the Guangdong PowerGrid Company. In 2002 the Southern Power Grid Com-pany was established comprising the transmission sys-tems of Guangdong and four other provinces in suothernChina, Guangxi, Hainan, Yunnan and Guizhou.

3.3. Power generation

Guangdong has little indigenous primary energyresources. With its high level of economic growth, diver-sifying its sources of feedstock has been a priority. Inthe year 2000 thermal power stations accounted forabout 72% of the provinces installed capacity. Thoughthis was very similar to the average for the country,Guangdong’s plant was characterised by an unusuallyhigh proportion of diesel and oil-powered capacity, poss-ibly more than 20% of total generating capacity (seeTable 1). A large proportion of the diesel generatorswere developed at times of power shortages in the 1980sto overcome disruptive power cuts and shortages. Muchof this plant is small, inefficient and polluting, and yetit still makes a major contribution to the province’s elec-tricity supply because of the persistent excess of demand

over supply. Guangdong has the highest share of nuclearcapacity of any province, at six percent in 1998. Asecond nuclear plant at Lingao added 1000 MW whenit was commissioned in July 2002, and a possible further1000 MW will be completed during 2003. This wouldbring the total installed nuclear capacity to 3800 MW,or 11% of the total in Guangdong. Hydro-electricityaccounted for about 20% of the provinces generatingcapacity in 1998. A substantial pumped storage facilityof 2400 MW also exists, with a second facility nowbeing planned. With the construction of China’s firstLNG plant in Guangdong, natural gas should slowly startto play a role in the provinces power sector (Andrews-Speed and Dow, 2003).

The construction campaign of the late 1980s and1990s resulted in Guangdong’s generating capacitybeing dominated by relatively new and large-scale units.In 1998 plants with a capacity of 100 MW or greateraccounted for about 70% of total capacity. One third ofthe total capacity of the province took the form of powerstations larger than 300 MW (see Table 2).

Power plants in Guangdong have a large range ofowners and ownership structures. In the year 2000, eachof the main entities described in the previous sectionwholly-owned and controlled some generating plants—namely the GEPHC at Provincial, County and Municipallevels and the wholesale county companies. The otherimportant category was formed by a wide range of so-called “ independent power producers” (IPPs) whichwere joint stock companies involving a number of differ-ent types of Chinese institution, including GEPHC andits component entities, and different levels of govern-ment. The remaining sources of power are the Daya Baynuclear power station, a small number of foreign IPPs,and power transmitted from other provinces. Most of thisimported power is generated in Guangxi, Guizhou andYunnan Provinces to the west, which are linked toGuangdong by a major high voltage transmission sys-tem.

Despite these investments, the generating capacity inGuangdong suffered from a number of weaknesses:

� Demand still exceeded supply and, in 2000 some 5%of total consumption had to be imported from thesouthwest of China;

� Even some of the newly built coal-fired plant wasrelatively inefficient (Zhang et al., 2001);

� The system lacked the flexibility to meet peakdemand, as most of the diesel-powered plants weresmall and were owned and dispatched locally.

3.4. Power sales

In the year 2000, there was a significant distinctionbetween the way in which power was purchased from aChinese plant and from a foreign IPP (Fig. 2). Foreign


Table 1Breakdown of thermal generating capacity in Guangdong Province in 1998

Super pressure High pressure coal- Medium pressure Gas turbines Diesel Totalcoal-fired fired coal-fired

Number of plants 31 46 105 56 458 696Capacity MW 9030 3232 1369 2117 4967 20,725Mean capacity MW 291 70 13 37 11 30Share 43.6% 15.6% 6.6% 10.2% 24.0% 100%

Source: Guangdong Electrical Power Holding Corporation.

Table 2Breakdown of all generating plants with a capacity of 100 MW or greater in Guangdong Province in 1998

100–299 MW 300–599 MW 600–999 MW 1000–2000 MW Total

Number 50 4 5 5 64Capacity MW 8066 1348 3100 7680 20,194Mean capacity MW 161 337 620 1536 315

Source: Guangdong Electrical Power Holding Corporation.

Fig. 2. Summary of purchase and sales arrangements in the Guang-dong power sector in the year 2000.

IPPs and the Daya Bay nuclear plant have the benefit ofPPAs with minimum running hours, on a take-or-paybasis, and a price formula to reflect all costs. This wasthe traditional model which was designed to create cer-tainty for the power plant and its lenders by effectivelytransferring the market risk to the power purchaser. Incontrast, GEPHC bought power from Chinese plantsunder purchase arrangements, not formal PPAs. Theprice under the purchase arrangement was set by theProvincial Pricing Bureau. The approval mechanism wasa form of income allocation. The Pricing Bureauapproved both a price and a volume of power for eachplant.

The approval of price and, in most cases, the volumewas given annually. If the actual level of demand waslower than expected, a “pain sharing” arrangementensured that the amount of power dispatched from allplants was reduced. The “gain sharing” mechanismworked differently, in that where extra power wasneeded the GEPHC called on the most efficient gener-ators. The practical problem was to establish whichplants were actually the most efficient. In the year 2000,the decision was made purely with respect to theapproved price, which did not necessarily reflect truecost of operations.

The purchase arrangement for imported power (fromother provinces) was not a formal PPA, but rather a ser-ies of annual agreements between South China PowerGroup5 and the GEPHC. This is the equivalent of the

5 Comprising the Yunnan, Guizhou and Guangxi ProvincialPower Companies.


United States arrangements for power sales betweenstates which are regulated by the Federal Energy Regu-latory Commission, but in the case of China there wasno equivalent regulator.

3.5. Network capacity and operational control

The rapid growth in generation and the associatedinvestment across China in the last two decades has beenpartly at the expense of the transmission and distributionsystems, and demand is occasionally not met due to con-gestion constraints on the system. Line losses can reach20%, and power factor problems reduce efficient use ofthe networks.

In the year 2000, the power system of GuangdongProvince comprised 21 city and 26 county grids, connec-ted through a main transmission network operating at220 and 500 kV. Through links to the Guangxi, Guizhou,and Yunnan provincial grids, it formed the South ChinaInterconnected Power Network. Detailed plans of thetransmission and distribution system are confidential andso it was not possible to evaluate the grid in Guangdong.However it is a reasonable assumption that it suffersfrom the same deficiencies as the rest of the country.

Dispatch in Guangdong was at three levels, provincial,municipal and county, which could not be as efficient asa fully integrated system. In simple terms the systemcombined “bottom-up” dispatch with “ top-down” systemcontrol and load shedding (Fig. 3). Dispatch appeared tobe based on annual and monthly plans of hours ofofftake for each generating plant. However, in generalthe current generation mix plus internal network andinter-provincial connector strengths provided adequatereserve power.

4. Key considerations in power sector liberalisation

The focus of this study was the introduction of compe-tition in generation. The main objectives were con-sidered to be:

� To improve the technical efficiency and lower thecosts of both generation and system operation;

� To improve the quality of service and reliability ofsupply for end-users;

� To achieve a long-term decline of real consumerprices, excluding the effect of subsidies;

� To ensure adequate funding for all parts of thepower system.

The fundamental features of any strategy to liberalisethe power sector include: restructuring the industry;developing a market system, particularly at wholesalelevel; introducing a system of regulation; and devisingmechanisms to address specific social and environmental

Fig. 3. Summary of dispatch system in the Guangdong power sectorin the year 2000.

issues. This paper will focus on the first two of these,industry structure and market development, and will alsoexamine some wider issues of the design of the reformprogramme. The detailed requirements of an effectiveregulatory system and mechanisms to address social andenvironmental issues are not addressed here. Thoughboth the social and environmental dimensions of elec-tricity reform are of great importance, how these con-siderations should be addressed are matters of govern-ment policy which lie outside the scope of this paper.But the approaches proposed here provide scope for spe-cific social and environmental measures to be included.

4.1. Industry structure

The principal way of liberalising the generating sectorin developed countries has been to break up the existingmonopolist, and at the same time to encourage newentrants. The result should be that there is a largeincrease in the number of generators. Those generatorsare then required to compete for market share, althoughthere are usually compensatory mechanisms in place toprevent abuse by individual generators at peak times ofthe day or year. In addition to creating new generatingentities, separation of the transmission function fromgeneration is required to prevent the grid company abus-ing its power. Depending on the pre-existing ownership


structure of the generating sector, it may be necessaryto sub-divide any generation entities which own morethan 10–15% of the total capacity and to group some ofthe smaller generating plant into larger enterprises(McEldowney, 1992; Hunt and Shuttleworth, 1996).

Two further separations are desirable to create theconditions necessary for full competition at wholesaleand retail levels. First, transmission can be separatedfrom distribution, and a number of local distribution andsupply companies can be created based on existing insti-tutions or parts of the former monopolist. Creating moresupply companies tends to create a more robust whole-sale market, and also permits the introduction of retailcompetition. Second, the functions of market operatorand system operator can be separated. Taken togetherthese measures greatly enhance the economic trans-parency of the system and increase the ability of theregulatory agency to fulfil its functions effectively.6

Corporatisation of utility entities, by splitting manage-ment control from ownership, is necessary to reducemonopolistic activities or attitudes, to provide a greaterfocus on the operating performance and efficiency ofindividual utility entities and to encourage competition.It is increasingly obvious that companies accustomed tomonopoly methods of running the electricity system arenot best placed to compete in a market. Full privatisationthrough the sale of state-owned assets to the private sec-tor is only one of a range of private sector participationoptions and is not a requirement or necessity for theintroduction of competition in the provision of utilityservices. Ultimately what matters is the number of com-petitors not their corporate status as private companies orpublic companies—there is no reason why a state ownedentity cannot compete alongside private companies.7

4.2. Market development

The aim of developing a market system is to ensurethe successful introduction of a competitive wholesalemarket in Guangdong Province and the gradual expan-sion of competition in supply and distribution to con-sumers.

One of the key requirements for the development ofcompetition in generation is to lower the barriers of entryfor new participants in the market (Hunt and Shuttle-

6 Separating distribution (local low-voltage wires) from trans-mission (high-voltage wires) is seen as a way of helping to establishgreater competition in the single market in the European Union; seealso European Commission reports (2001, 2002) on the completion ofthe single market and Helm (1998).

7 As happens in the case of Electricite de France (Helvin, 2001).

worth, 1996).8 Encouraging new entrants in the gener-ation sector through private sector participation in theoperation of existing power plants is probably one areawhich could contribute to the early development of com-petition through the improved efficiency of plant oper-ations. The key is to link the reward to the improvementin efficiency—effectively paying more for greater per-formance, and to try to achieve a competitive result bytendering for the right to take over operations. Barriersto entry need to be reduced for a number of activities,namely power generation, construction, management andservice provision, fuel supply and provision of finance.

A wide variety of types of power generator will par-ticipate in Guangdong’s new power market. It is essen-tial to ensure that they are competing on a fair and trans-parent basis, otherwise the required investment will notbe forthcoming. The issues which will require specialattention include plants in Guangdong versus plants inother provinces, state-owned versus private powerplants, old and inefficient versus new and efficientplants, coal versus hydro and nuclear plants, and cleanversus dirty plants.

The establishment of a competitive generation sectorcreates both opportunities and threats. It should bestressed that newcomers have the opportunities and thatthe existing participants, mainly the former monopolist,face the threats. Unless demand grows, the former mon-opolist will lose market share to the new entrants. Thre-ats appear greatest when the former monopolist remainsvertically-integrated. In that case, the supply arm is sup-posed to treat outsiders in exactly the same way as itsown generating arm which is likely to be difficult in theabsence of licence conditions and strong competitionlaw enforcement.9

In order to increase transparency and reduce the likeli-hood of concealing cross subsidy, it is of critical impor-tance to establish the cost of generation. To do so is farfrom easy in practice. One particular problem concernsthe cost of plant in other provinces. Whatever method-

8 Barriers to entry are normally set by government. Some are essen-tial, for example licensing to establish the credibility and expertise ofthe participants. Some are more problematic, for example a lack oftransparent merit order, a lack of third-party access, an absence ofgovernment guarantees for lenders an absence of guarantees of offtakerperformance, or government action which benefits one party at theexpense of others.

9 It is possible to have a degree of vertical integration in a competi-tive system. The wires businesses in Scotland (part of the UnitedKingdom) remain within the same corporate entities as some generat-ing assets and the supply business. There is a special regulatory regimein place making it a condition of the licence that there is no crosssubsidy between the businesses and that control of the wires does notdistort the generation market (Dow, 2000). This is an unusual case andone which is designed to fit its own context. It is difficult to extrapolatefrom a very small system which has some vertically integrated compa-nies but in which the majority of generation comes from inde-pendent companies.


ology is adopted by Guangdong will lead to one parti-cular set of results. If another province uses a differentmethodology then that province will come to a differentresult. Such an approach runs the risk of distorting themarket. A significant potential problem arises in relationto hydro power. China has a number of extremely largedams, and establishing the true cost of power from hydrosources is particularly problematic. The argument is overhow to price the external costs including environmentaldamage, and also how to take account of the fact thatmost large dams are built for the purpose of controllingrivers as well as producing electricity. Allocating thecosts can be done in different ways. It is, however, clearthat central government would like to see all the powerfrom new large dams sold at a price which pays for theinitial cost of the dam. There is an obvious problemwhere this price is higher than locally produced power.Whilst this particular problem may not arise in Guang-dong in the immediate future, it is one which the govern-ment will have to face if competition in generation is tobecome a reality across the whole country.

A more pressing problem for Guangdong is the issueof “old” versus “new” electricity. Old power plants arethose which have paid off their capital costs. New planthas not, and the power price reflects that. Most new plantis planned to be built on debt rather than equity, and aform of volume guarantee, the power purchase agree-ment, is traditionally required to satisfy the lenders. Inthe absence of a fully competitive market and in theabsence of confidence of sponsors and lenders in thatmarket, generators cannot reasonably be expected to bearthe volume risks.10 The result is that any new plant builtwill have a PPA which displaces old plant in the systemunless demand rises. The resolution of the old versusnew problem is likely to be found in the relationship ofthe plant building programme to the demand forecast.There are significant risks involved but the problemshould not be exaggerated.

The most difficult problems are likely to relate to rela-tively new plant which has not got a formal PPA buthas not yet paid its capital costs. There is a significantrisk of stranding such plant in a competitive market.There is no single way out of a stranded cost problem,but appropriate design of a transition period should mini-mise the difficulty. The transition period allows protec-

10 It is worth remembering at this point that whilst the UK is gener-ally considered to be a competitive market today, reform began in1989. There were numerous problems to be overcome before the mar-ket became properly competitive (McEldowney, 1992) to the pointwhere sponsors and lenders were content to establish merchant powerplants assuming volume risks. That point was not reached for a decade.With the current financial problems facing these generators, and theproblems of British Energy, it is highly unlikely that sponsors andlenders would take a risk on merchant plant today.

tion for the plant whilst it recovers the stranded costs.It then competes like any other plant.

There is one further awkward problem over clean anddirty plants. Currently there is no internationally recog-nised solution to the problem where one plant is verycheap but pollutes whilst another is more expensive asit has anti-pollution measures built in. Various solutionsranging from carbon taxes to pollution permits have beentried. The obvious solution is to internalise the exter-nality by reflecting the cost of pollution in the price ofpower. There is a significant problem in obtaininggovernment support in China for measures to curb pol-lution. In many cases in Guangdong the government hasa direct financial interest in the polluting plant. The prob-lem can only be effectively tackled through establishinga methodology to work out the true cost of power froma plant. In the absence of a fully competitive market,that methodology needs to be set by a regulator.

Establishing the cost of power is not the only problemfacing regulators. Institutional control of transmissionpricing is one of the most difficult tasks. Transmissionis a natural monopoly and cannot be opened to compe-tition, although it is possible to have a tender to awardthe right to operate the wires for a set period at a parti-cular cost and to give the right to the party offering thelowest cost. Allowing access to the wires on a trans-parent and non-discriminatory basis is essential to thedevelopment of competition in the generation sector asis the availability of information on the transmission sys-tem capacity, constraints and operation. In the absenceof such information it is impossible to establish thecheapest source of generation to meet demand in a parti-cular location. The key step in that process is the devel-opment of an appropriate transmission pricing.

4.3. Design features

In addition to these specific considerations, any pro-posed programme of reform should meet a number ofmore general requirements related to the dynamiccharacter of sector reform and to the wider political andeconomic context.

Scope for evolution should be built into the proposalsbecause the sector and market structures adopted uponfirst introducing reforms and competition will almostinevitably need change as the sector players gain experi-ence of operating in a competitive market, the structureof the sector develops and the market matures as compe-tition expands. The reformed structure should incorpor-ate the capacity of “self-healing” in order to enable anydeficiencies or failings which subsequently arise in thatstructure or with the implementation and operation ofthe market mechanism, to be corrected or measures


introduced to compensate for their effects.11 The prob-lem with liberalisation in general is that it is immenselydifficult, if not impossible, to ensure that the industrystructure and ensuing competition actually achieves theoriginal aims. There are inevitably problems and it isunrealistic to expect that new legislation can be enactedquickly to correct each difficulty. The obvious answer isto create a self-healing mechanism within the regulatorystructure. Such regulatory powers allow a degree offlexibility to be imposed on the pace and nature of struc-tural change.

Various interests of parties with a stake in the elec-tricity sector in Guangdong need to be aligned to facili-tate effective and successful implementation of reformplans for introducing competition. Those parties willinclude consumers, power sector industrial groups(generators, transmission entities, supply and distributioncompanies, and fuel suppliers) and government agenciesat different levels. Consumer interests are of primaryimportance because the purpose of power sector reformis to provide benefits which flow through to the end useror consumer of the utility service in terms of lowerprices and improved service quality.

In looking at the power sector, if new plant is to bebuilt on debt, the interests of lenders cannot be ignored.Lenders will not allow a plant to take volume risk in theabsence of an established transparent market. Regu-lators, particularly independent regulators, operating oneconomic criteria help to satisfy lenders. Legal structuresto allow contractual protection of market share, and topermit guarantees and enforcement of guarantees, areessential. Reform is a package deal, not one which caneasily be approached piecemeal.

The final consideration concerns the magnitude of thesteps in the reform programme. As discussed in theintroduction, the fundamental premise of this paper isthat to move in one step to a mandatory pool with asingle buyer is not feasible in many countries, for a com-bination of political, economic and technical reasons.Intermediate steps are necessary. However these stepsshould not be so small that the parties can, in effect,avoid making critical decisions whilst still claiming tobe undertaking reform. A big enough step has to be takento show outsiders, particularly sponsors and lenders, thatsomething fundamental has changed.

11 Self-healing is perhaps the greatest lesson taught by the UK’s gasliberalisation experience. The initial liberalisation is generally regardedas extremely poor thought out; but over a period of some 15 years theregulator was able to establish a competitive market. The regulator isnow satisfied that there is sufficient competition to enable him to aban-don all price controls (Office of Gas and Electricity Markets, 2002);see also Monopolies and Mergers Commission (1993) and Dow(2001).

5. Step One: efficiency improvements and costreductions with no market

The first step recommended by our project team wasdesigned to precede the introduction of any form of com-petition in power generation. The development of thisstep recognised that the power system in GuangdongProvince was not in a physical or organisational state atpresent in which competition could be introducedimmediately, and that substantial improvements couldand should be made before the launch of competition ingeneration. The main objectives of this step are:

� To improve the technical and operational performanceof the plant and the system to achieve improvedefficiency, cost reductions and service qualityimprovements;

� To ensure that the operational capacity of the systemis sufficient for the successful introduction of compe-tition in generation.

Four main tasks can be identified. The first requiresdevising a generating plant-use plan which will improvethe technical performance of the existing plant andimprove plant efficiency generally. The implementationof this plan will include directing thermal power plantsto operate at significantly higher levels of availabilityand reducing or eliminating the dispatch of small-scalediesel power plants (bearing in mind that there are largenumber of such plants). Management contracts andleases with reward linked to performance can be usedwhere tendering for this right is transparent and non-discriminatory. Over time it will be necessary to aban-don the present allocation of dispatch hours and whole-sale plant tariffs set by the Provincial Pricing Bureau andin place of that arrangement to adopt a procedure fordispatching plants on the basis of generation price. Sucha merit order might be based on either “approved costs”or on technical efficiency. It is an interim step on theway to creating wholesale competition based on purelyprice competition between generators.

The second task is to draw up standards and con-ditions under which large energy users can purchasepower directly from individual generators. This alsoneeds access to the wires and some arrangement forensuring delivery of the power. Prior to implementingthis arrangement, consideration must be given to theregulations and technical conditions under which thesebilateral purchases might be put in place and operated.Clearly standards for connection, protection and systemsecurity must be established in connection with theselarge user power purchase arrangements along with mea-sures to ensure that any system constraints resulting fromthose arrangements can be resolved to enable futureadditional consumers to be served. A particular concernis that the large-user arrangements should not constrainthe progressive introduction of competition.


Third, it is necessary to accelerate the rate of invest-ment in the transmission and distribution systems, bothwithin Guangdong Province and across South China, andto carry out studies to determine congestion points sothat necessary system upgrades and extensions can bemade. A strong transmission system allows optimum useof existing generation plant capacity as well as providinga platform for the successful operation of competitivegeneration. It also allows the possibility of using under-utilised plants in other provinces to serve growingdemand in Guangdong, saving the cost of building anew plant.

Finally, the existing demand-side managementschemes in Guangdong Province need to be improvedto further influence consumer power demand with theaim of reducing the peaks and undulations in dailydemand.

This first step of the reform programme requires nolarge structural changes to the power sector in Guang-dong Province, but does require an overhaul of oper-ational procedures. These measures should yield short-term benefits such as gains in technical efficiency, lowercosts and the pass through of those benefits to consumersin lower tariffs, remembering that the pass-through isentirely within the hands of the pricing bureau. Indeedsome components of Step One are already being carriedout, such as investment in transmission and distri-bution infrastructure.

Step One will not provide a long-term basis for sus-tained efficiency gains and cost reduction as theimplementation mechanisms are too open to bureaucraticand political interference, and because the incentivesprovided to the industry are both limited and crude. Asa result, the level of technical efficiency gains and costreductions achievable through the measures outlinedabove is likely to be significantly less than those achiev-able with a competitive market.

Despite these disadvantages, Step One is a necessaryand practicable intermediate stage to the development ofa market in power generation in Guangdong. It provideseffective interim measures which allow for efficiencyimprovement and cost reductions to be achieved, whilstthe necessary planning and preparation for subsequentstages of the reform process are progressed. It also helpsthe incumbent participants prepare for future compe-tition and it changes their mindset.

6. Step Two: transition wholesale market

6.1. Objectives

The “ transition wholesale market” has been devisedas a second intermediate step towards the introductionof a mandatory pool with a single purchasing agency.The main features which distinguish this model from the

mandatory pool are the treatment of uneconomic plantand embedded local generators, and the way in whichthe distribution and supply companies purchase whole-sale electricity.

The main objectives of Step Two are:

� To establish a competitive market with those gener-ators with cost structures which enable them to oper-ate economically;

� To support efficient generators with uncompetitivecost structures with PPAs;

� To achieve a transition to a fully competitive gener-ation market based on a mandatory pool with a singlepurchasing agency.

6.2. Key features

Step Two requires that the market be explicitly div-ided into a competitive part, the pool, and a contract partbased on PPAs (Fig. 4). The choice of which plants enterthe competitive market and which go to the contract mar-ket is ultimately a policy decision and one which is prop-erly made by the regulator. New generators are likely toseek PPAs. Existing generators with stranded costs arealso likely to seek PPAs. A further policy decision mustbe made as to the extent of cost recovery under the PPA.Generators will obviously seek recovery of all costs. If,

Fig. 4. Step Two of the proposed programme of reform: the transitionwholesale market.


however, there is excess capacity which can be sold intothe pool, it may be possible to set the PPA to recovermost costs and compel the generator to seek to coverthe remainder in the competitive market. The contractpart of the market, in which electricity is sold to thePurchasing Agency under a PPA, is designed to createinvestor confidence in building new capacity.

Introducing an electricity pool requires that all parti-cipants have access to complex and expensive softwaresystems. The transition wholesale market allows the costto be spread over a longer period of time as generatorsgradually move towards the Pool. The key point of StepTwo is that not all generators are subject to the competi-tive pressures of the pool in the initial phase of reform.Full competition in generation will require the buildingof new transmission infrastructure. At present, localembedded generators are simply not in a position to sellpower to any part of the province without new trans-mission wires being built. There is little point in compel-ling such generators to join a competitive market.

The step to a transition wholesale market does notrequire the sale of any state assets to the private sector.However, one way of addressing the problem of old andlow cost plant gaining an excess profit when receivingthe pool price is to sell the plant. The buyer might be aprivate company. The purchase price or concession feeshould reflect the plant’s cost advantage and thereby pro-vide the provincial government with a capital sum orstream of concession fees to offset the cost of providingthe offtake arrangements for the newer plants withinitially high fixed costs.

The transmission grid remains state-owned andaccordingly is more easily regulated than a private sectormonopoly. In common with the mandatory pool, theoperational management of the network can be separatedfrom its ownership. The most likely first step is that thecurrent GEPHC team continue to operate the grid, butare reorganised as a separate company. In due course itshould be possible to tender for the right to operate thegrid. In any event, it is essential to establish transparenttransmission and distribution pricing, and provide regu-latory incentives for better performance. Where themunicipal companies (MunCos) and county companies(CoCos) are separated, it will also be necessary to allowaccess rights to the transmission network.

Eventually retail competition could be developed fromthe transition wholesale market. It will be necessary toseparate and corporatise the MunCos and CoCos, prob-ably with initial exclusive regional franchise areas. Itwill then be necessary to allow these supply companiesto offer services in the geographical territory of theothers. It will also be necessary to allow access rightsto their distribution networks. Retail competition can begradually introduced, giving very large users the right tochoose supplier and slowly extending the right to smaller

users as the software systems to track usage and billingare put in place.

The transition wholesale market partly resembles theNordic system in that there is an explicit division of themarket into a pool and a contract part (Arnesen et al.,2001). In the Nordic system, the contract part is subdiv-ided into short-term and long-term arrangements forwhich there is competitive tendering. It is not envisagedthat these arrangements would be immediately followedin Guangdong; the pooling part should be allowed tobecome established before short-term contracts areallowed. The special features of the approach for Guang-dong is that the contract part of the market initially com-prises only long-term PPAs. This is aimed at creatingthe environment in which investors will be happy tobuild new plants. The design for Guangdong is uniquein order to take account of the particular characteristicsof the electricity industry in the province.

6.3. Key tasks

Re-organising and corporatising the existing compa-nies will be essential. In particular, the generators shouldbe separated from the network. Policy decisions as towhich generators will enter the competitive market andwhich will enter the contract market must be made. Thedecision is not a one-off, but rather is a programme overtime. These decisions determine the level of competitionand also the pace of development towards a fully com-petitive market. The Purchasing Agency must be carefulnot to buy too much power under long-term contractswith price formulae, but it must buy enough to promoteinvestor confidence and allow new plant building. Thedecision also determines the level of stranded costs paidby contract and the level left in the competitive market.In addition, a policy decision on extent of cost recoveryallowed under the PPA will be essential, again showingthe need for consistent methodology in establishingcosts.

A new transparent pricing structure must be intro-duced in order that transmission and distribution costscan be clearly identified. Without such price trans-parency the regulator will not be able to design properincentives to reduce costs. The regulator already suffersfrom the information asymmetry; transparency is theonly real defence to that problem.

It will be necessary to operate a tendering system fornew plant which seeks to enter the contract market. Newentrants must compete for the right to build and obtaina PPA. Competition for new build is not a complete sub-stitute for competition in generation. New build compe-tition is a single event whereas competition in generationrevisits the issue on a regular (hourly) basis. Nonethelessthere is no point in building overly expensive plant, andwhere the conditions for new build are attractive theprice for electricity will be lower.


A range of legal and regulatory issues need to beaddressed. The government will have to draft and enactenabling legislation to implement the changes to thestate-owned electricity companies and also to establishthe regulatory framework. Liberalising the electricityindustry may require more regulation than the currentstate system. The powers and duties of the new regulat-ory agency, along with controls and supervision, mustbe clearly set out. To satisfy investors (both private dom-estic sponsors and foreign investors) the regulator willneed to be responsible for licensing the industry parti-cipants, establishing the tariffs in non-competitive partsof the market, and encouraging competition in the com-petitive parts. The authority of the regulator must beexplicit in the framework, and it should be clear to whomthe regulator reports. Competition law and enforcementwill also be necessary for the continued operation of themarket. Competition must be transparent and fair.Except in the case of natural monopolies, one companymust not be permitted to dominate the market.

6.4. Advantages and disadvantages

The transitional wholesale market has been developedfrom the existing system in Guangdong and takesaccount of the embedded local generators being con-strained by the network from entering the competitivemarket. Gradual change and small steps are possible onthe route to full competition. The reality is that networkcapacity and market software is not in place to allowimmediate full competition. Getting to full competitiongradually allows the infrastructure to be put in place overtime. It also allows for the development of investor con-fidence so that PPAs will no longer be necessary.

Regulatory incentives can be put in place to put press-ure on transmission, distribution and supply costs. Retailcompetition can be introduced in the future, subject tothe status of the MunCos and CoCos and the introduc-tion of access rights to distribution infrastructure.

The transition wholesale market provides a muchgreater chance of success than the direct introduction ofa mandatory pool for making substantial progresstowards attaining some of the main objectives of compe-tition, especially improving technical efficiency, lower-ing costs and raising the quality of service and reliabilityof supply. Sustained progress on consumer pricing willperhaps not be possible until a mandatory pool is intro-duced, as well as retail competition. In the absence ofretail competition, consumer prices will be set by theregulator who can pass through lower generation costsand reduced transmission costs.

Despite the advantages of the transition wholesalemarket, small steps provide opportunities for delay aseach step will require approval. Delay in extending com-petitive pressures will mean that the benefits of the com-petitive market are delivered more slowly. Full compe-

tition is not immediate and so the benefits are notimmediate. However it is probably not realistic to moveto immediate full competition in generation, and inves-tors are not yet ready to build plants without PPAs.

7. Step Three: the mandatory pool with a singlepurchasing agency

The mandatory pool with a single purchasing agencyis commonly considered to be the first step on the wayto full competition in the electrical power sector (Huntand Shuttleworth, 1996). In the approach presented bythis paper it is the third step (Fig. 5), and followsefficiency improvements and cost reductions gainedfrom the two previous steps.

The objectives and key features of the mandatory poolwith a single purchasing agency have been described atlength elsewhere (McEldowney, 1992), as have theirpotential applications to China (Shao et al., 1997; Berrahet al., 2001). In this section we focus on the stepsrequired to move from the transition wholesale marketto the mandatory pool.

The transition to a mandatory pool can be achievedas the plants with stranded fixed cost structures whichwere granted contractual offtake arrangements in thetransition wholesale market, gradually recover theirinvestment costs and become more competitive. Thetransition period is time-limited. During the transitiontowards the mandatory pool the proportion of plants bid-ding in the pool will increase until only the most recently

Fig. 5. Step Three of the proposed programme of reform: mandatorypool with single purchasing agency.


developed plants need offtake arrangements to overcomeany lack of investor or lender confidence.

The control and ownership of all existing municipaland county generators need to be separated from theirrespective MunCo or CoCo. These generators, many ofwhich are relatively small, would probably be groupedunder individual generator holding companies. TheMunCos and CoCos, currently part of GEPHC, would berestructured as local supply companies. Bilateral powerofftake arrangements will need to be negotiated betweenthose generator holding companies and the local MunCoor CoCo on competitive market terms. The regulator willneed to supervise those offtake arrangements and to con-trol prices to ensure economic purchase by the local sup-ply company.

Stranded costs will remain an issue to be addressed.One option is to ignore stranded costs and require allgenerators to bid into and sell their power in the poolrather than cover their uneconomic costs through con-tractual offtake arrangements between the uneconomicgenerator and the purchase agency. Ignoring strandedcosts will meet with strong resistance from existinguneconomic generators, particularly from recent inde-pendent power projects, and will deter future private sec-tor sponsors, investors and lenders from developing andfunding new generating capacity.

In the initial stages of the transition wholesale marketthe supply companies may be grouped and may operateas a single entity. In due course the individual regionalsupply companies can be separated, thereby providingdirect management control to focus on improvingoperating efficiencies, lowering costs and separateaccounting. Separating the companies will provide com-parative cost structure information for the regulator tosupervise the companies and to control prices. Later theregulator will be able to introduce greater retail compe-tition between electricity suppliers. The eventual numberof MunCos and CoCos is likely to be determined byscale. The supply companies must be big enough to havefinancial strength to compete, whilst at the same timethere must be enough companies to sustain competition.

Enhancing the creditworthiness of the supply compa-nies and the purchasing agency will be necessary, prob-ably by support arrangements backed by the provincialgovernment, as the power purchase obligations of thoseentities will result in substantial credit and paymentexposures.

The functions of the purchasing agency and marketoperator can be separated. In Fig. 5, the functions of theMarket Operator and the Transmission System Operatorare illustrated as part of the same entity. These functionscan be in one entity, but as the role of the PurchasingAgency is designed to be transitional, a separate pur-chasing agency may be simpler to regulate. In simplisticterms, the Purchasing Agency will no longer be neededwhen there is sufficient confidence in the market for all

electricity to be traded in the Pool. The disappearanceof the Purchasing Agency will be a signal that the marketis maturing and that competition has been successfullyestablished. The aim of the Purchasing Agency is toovercome initial lack of investor confidence. If it is suc-cessful its role will disappear over time.

These measures which build on the transition whole-sale market will result in a system which has the industrystructure and market characteristics associated with amandatory pool with a single purchasing agency (Fig. 5).

8. Step Four: a multi-provincial market

The four southern provinces of China (Guangdong,Guizhou, Guangxi and Yunnan) have a large potentialcapacity for power generation, particularly through theuse of hydro-electricity. However, the geographic matchbetween the potential capacity and the demand is poor:most of the demand lies in Guangdong province in theeast and most of the potential hydro-electric capacity liesin the other three provinces to the west. Thus whicheverroute to competition is chosen, it is necessary to establisha mechanism for trading power between provinces andto construct the infrastructure for transporting the power.

Step Four is based on creating a single market acrossthe four provinces. The objectives are to maximise theefficiency of utilisation of energy resources and to placefurther downward pressure on wholesale and consumerprices across the whole region. The multi-provincialmarket can be structured in either as single pool whichspans all four provinces or as a multiple pool system.

If a multiple pool system is used, three types of struc-ture might be considered. In the first option all the poolsare at the same level and they are ‘ fully’ interconnectedwith each other. This means that there is no dominantpool and power trading can be done between any twopools without the need to wheel power through a thirdone. The second option takes the form of a dominantpool and within it are embedded several smaller pools.The third option also has a dominant pool with a numberof smaller pools lying outside it but all at the same level.If there is little or no transmission capability betweenthe smaller pools and power trading between them needsto be wheeled through the dominant pool. The poolscould be imagined as in a two level hierarchical structurewith the dominant pool situated at the top. Multiplepools of different types have been implemented in Aus-tralia and the USA (Redgwell, 2001; Brennan et al.,1996).

The key features of the regional market would dependto a great extent on which market structure was chosen.In all models the large consumers and the distributionand supply companies could purchase power from gener-ators anywhere in the four provinces, and the scope ofretail competition could be gradually expanded to cover


all consumers. The success of the regional market woulddepend on the construction of sufficient and appropriatetransmission infrastructure and on the existence of singleregulatory agency to regulate the whole region. The Eur-opean Union provides an example of an “ inter-provincialmarket” if each of the European countries is consideredto be equivalent to a Chinese province (European Com-mission, 2001, 2002).

Assuming that adequate transmission infrastructure isin place, the main obstacle will be the political resistancefrom provincial governments and provincial power com-panies which will see, respectively, their influence andmarket power diminished.

9. Conclusion

The electrical power sector in China, in common withmany other developing and transition states, is at thebeginning of the reform process. In recent years thegovernment appears to have been wracked with inde-cision which is based on uncertainty on which route totake and on a justifiable fear of the consequences of fail-ure. Even if the desirability of liberalisation has beenaccepted, there remain the questions of the nature of thefirst steps along the road to liberalisation and the timingof these steps.

The standard approach proposed by international insti-tutions and consultants would favour a relatively rapidmove in a single step to a mandatory pool with a singlepurchasing agency. This paper has argued thatembarking on liberalisation in such a bold manner in anycountry is likely to lead to successful implementationonly when certain essential pre-conditions are met.These conditions have indeed been present in a smallnumber of countries, mostly developed states, wherepower sectors have been liberalised with some success.They are largely absent in most developing and tran-sition countries.

In the absence of most of these pre-conditions, a step-by-step approach is recommended for the introductionof a mandatory pool. Up to two separate preparatorysteps may be required in the case of Guangdong Prov-ince in China. The first step involves the upgrading ofthe technical and operational capacity and efficiency ofthe system and consequent cost reductions, with littlemajor change to the structure of the industry. The secondstep sees the development of a transition wholesale mar-ket with two parts: some plants sell through a competi-tive pool and some through PPAs. This transition marketprovides a foundation from which a mandatory pool maybe introduced for the whole province. This pool maythan be linked to those in adjacent provinces acrosssouthern China to take advantage of a surplus of generat-ing capacity in these other provinces.

Acknowledgements

This paper is an outcome of a consultancy projectentitled “ Introducing competition in power generation inGuangdong Province, China” carried out in the year2000. The project was co-financed by the Synergy Pro-gramme of the Directorate General for Energy (XVII) ofthe European Commission and the Department of BasicIndustries of the State Development Planning Com-mission of China. Much of the information presented inthis paper is based on the first-hand knowledge of theproject participants, on unpublished internal reports, andon interviews with government officials and companymanagers in both Beijing and Guangzhou. We are grate-ful for the support of other members of the project teamwhich included: from the European Union, Stephen K.L.Lo, Alexander Russell, Christian Egenhofer, Paul Stev-ens, Andrei Kuxenko, Aijuan Wang and Sidney Dodd;and from China, Gaofeng Cai, Jiujin Zhao, Min Gao,Hua Qin and Xiaodong Fan.

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first steps in power sector reform: the case of china’s guangdong province

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