New threshold for reform of transmission and distribution prices: difficult start

After the completion of the “Separation of Main and Auxiliary Divisions”, China’s power system reforms have finally entered the most difficult stage of “separation of transmission and distribution”; however, the reform of “deepwater areas” is only a measure of transmission and distribution prices, and it faces a round of game between the interests of various parties. The details of history are always intriguing. In September 2011, the national electricity price work conference was held in a low-key hotel in Wanjiali Road, Changsha City, Hunan Province. With regard to the next major issue of the reform of the power system, the plan for the transmission and distribution price reforms, various parties have conducted fierce discussions here.

Just a few months before the meeting, traffic lights at the intersection of Wanjiali Road and Changsha Avenue were suspended due to power curtailment. The most prosperous intersection in Changsha was in a chaos, and the traffic police had to call in emergency diesel generators.

Hunan is one of the provinces that have encountered this round of "great electricity shortage." The coal price is upside down, and the price mechanism is distorted. It is considered by many people in the industry as the culprit of the “electricity shortage” in many provinces in 2011.

For many years, the reform of the electricity price system, the core of the power system reform, has moved forward in coal mines and other minor repairs, and many contradictions have not been completely resolved.

The thermal power, which accounts for 70% of China's installed capacity, was considered by some analysts to be on the verge of collapse.

The coal-electricity linkage that began in late 2004 was basically silenced after several implementation. In the first half of 2011, the average national standard coal price to the factory included 880 yuan/ton, which was 200 yuan more than that in the first half of 2008; and the on-grid price of coal-fired units nationwide had risen by 3 cents since August 20, 2008. / Degree, only digested the price increase of 90 yuan / ton of coal.

Lu Qiang, an academician at the Chinese Academy of Sciences, believes that coal and electricity should form a balance of “who does not dare to raise prices first, and who will hurt prices first.” This is currently an unstable system that eventually evolves into a round of price increases.

"The current 'electricity shortage' is an institutional 'electricity shortage', which will occur in 1.5 to 2 years as a cycle." Lu Qiang said in an internal forum, "this equilibrium, and ultimately resort to electricity system reform ".

The problem of transmission and distribution prices In 2002, the State Council issued the "Power System Reform Plan", namely "Document No. 5", which set forth the four major steps of "electrical system reform", "separation of plant and network, separation of main and auxiliary facilities, separation of transmission and distribution, and bidding for access to the Internet."

The progress of the separation between the plant and the network was very smooth. The five major power generation groups and the two major power grid companies had already been successfully established; before the National Day holiday in 2011, the two major auxiliary groups of China Energy Construction Group and China Power Construction Group were listed, indicating that the separation between the main and auxiliary industries had also been established. Basically ended; although the industry has a lot of criticisms about grid construction and design agencies remaining in the grid, they are not disguised, and their reforms have received quite a lot of praise.

As for the next step in dividing the distribution business of the grid business, the industry has consistently expressed its concern.

Regarding transmission and distribution, an old expert in the power industry said, for example, “The power generated by a power plant is sent to the destination through the transmission network. The transmission network is like a highway, and the distribution network divides the transmission grid into small packages. For each user, the distribution network is like a LTL carrier in the city; the transmission network is like a trunk, and the distribution network is like a branch.” Power transmission and distribution revenue is the main source of revenue for the two major power grids. The separation of power transmission and distribution is the key link in the power system reform to break the grid monopoly.

To make the power grid divide transmission business and distribution business, the first task is to clarify the transmission and distribution prices. In 2010, the National Development and Reform Commission issued the “Circular on Launching the Research and Calculation of Transmission and Distribution Price”, requiring all provinces to set up a research group for transmission and distribution tariffs. Starting from June 2010, the nationwide transmission and distribution tariff research and measurement will be started. November 2010 Submit the mid-term research report and submit the final study report in March 2011.

“All provinces have not completed and no province has submitted a report.” At the National Price Work Conference held in Changsha in September 2011, the relevant person in charge of the Price Division of the National Development and Reform Commission had no choice but to ask the provinces to report orally; finally, the National Development and Reform Commissions of the provinces (Urban) The price departments and provincial branch companies and subsidiaries of the power grid (abbreviated as provincial companies) all attended the meeting and gave a speech.

The results of transmission and distribution tariffs reported by the provinces are quite different. There is a huge gap between provinces and provinces. There are less than 0.1 yuan/degree, and 0.1 yuan/degree or more and even more than 0.2 yuan/degree; some provinces have not been completed. Measured; and several provinces of the Price Bureau directly indicated that the work was done by the grid companies, and asked the provincial staff to report the results of transmission and distribution prices on their behalf.

The "Measures for the Supervision and Evaluation of Price Determination by the Government" clearly stipulates that "the specific work of cost supervision and examination shall be carried out by the cost investigation agencies of the price administrative departments of the people's governments at all levels."

“This is like letting the wolf decide to eat a few sheep himself. Of course the result is more and more good,” said an official of the Electricity Regulatory Commission.

“The pressure of not reforming is too great, and it is also detrimental to the development of power grid companies.” The head of the price division of the National Development and Reform Commission used the word “steadfast” when talking about pushing forward the reform of transmission and distribution prices. He believes that "this is actually a matter of understanding. Grid companies are concerned that they will suffer losses in the transmission and distribution price calculations. There is also reason for this; however, the current priority is to make transmission and distribution costs transparent."

How transparent the grid's abacus transmission and distribution costs are, mainly involves a number of pricing parameters.

"The most critical thing is how to calculate parameters, how to determine the problem." Li Ronghua, director of the State Grid Finance Department, said that depreciation, operation and maintenance costs, employee compensation, and return on capital are all very important. State Grid has 2.2 trillion yuan in assets, but its main business profit is only about 20 billion yuan a year, and the net return is less than 2%.

Li Ronghua believes that the current price difference between purchases and sales is unreasonable, and the transmission and distribution tariffs are not in place; if the parameters are unreasonably set, even some provincial companies will require lower transmission and distribution costs, which will dampen the reform enthusiasm of power grid companies.

According to Director Tan Zhenyong of the Price Department of the Ministry of Finance of the State Grid, according to different situations in different regions, the value range should be given a relatively large range; in addition, Tan believes that the average actual transmission and distribution price should be calculated first, and the voltage rating and sub-user The price of transmission and distribution is meaningless.

The reason why the voltage grade is not divided is because some bad scores cannot be figured out to be really a problem. Li Ying, chief economist of the State Grid Energy Research Institute, told reporters that “employee compensation and taxes are difficult to break down into voltage levels, and there is no need for decomposition; even if it is decomposed into voltage levels, it is difficult to judge its rationality”.

In order to reduce the resistance to reform, the relevant officials of the National Development and Reform Commission's Price Division suggested that “the old asset old cost, new asset new cost”, that is, set the target as a limited target in the initial stage of reform, separate the stock and incremental assets, and not move or lighten the vested interests of the power grid.

In this regard, the relevant person in the Ministry of Finance of the State Grid proposed that it is possible to target the actual transmission and distribution tariffs in 2010 and to verify reasonable parameters for new assets in 2011 and beyond to solve the historical and practical convergence problems.

If this proposal is passed, it means that the costs before 2010 will be completely rationalized and will no longer participate in the supervision and review, and only the parameters of new assets after 2011 will be approved.

Some analysts have pointed out that without changing stocks, only incremental changes are made and vested interests are maintained. The main purpose is to reduce resistance to reforms.

The depreciation fee is the cost of the major audit in the pricing supervision and review and is also the focus of this debate. Some provincial companies have suggested that the depreciation period is completely unreasonable in accordance with national regulations. The nature of fixed assets, actual use, and development stage of power grids should be considered as a whole. The reason is that “China’s power grid assets are due to congenital conditions, technological progress, and upgrading. For other reasons, the economic useful life is generally lower than the international level. Too low a regulatory depreciation rate policy does not meet the actual development of the power grid.

The senior executives of the State Grid also stated that increasing the depreciation rate properly, as compared with raising the profit level, can effectively avoid the impact of corporate income tax on electricity prices. “Each increase in depreciation rate by one percentage point will reduce the transmission and distribution tariff by about 2%.”

In addition to depreciation charges, the operation and maintenance fees are also the focus of this hot debate. The operation and maintenance costs include materials, repairs, employee compensation, and other expenses, which are another important part of costs.

The statement that the high salary and high welfare of the power grid has been circulating in the society for a long time. Regarding the remuneration of employees, a number of employees of the provincial companies indicated that the labor cost of the power grid is a dual-track system. The actual number of employees in the industry is far more than the number of employees. The salary of these employees has always been reflected in the labor costs, resulting in actual costs that are higher than the book costs. Take it into consideration.

At the meeting in Changsha, State Grid publicly stated that power grid companies are intensive in technology, capital, and talent. In recent years, labor intensity and workload have continued to increase, and the quality of personnel has improved. It is necessary to appropriately raise the level of compensation. “The measures proposed by the National Development and Reform Commission to use multi-industry 'social average wages' to calculate employee compensation make the growth of employee income dependent on the increase in income of other industries, which is not conducive to motivating employees to increase labor productivity, nor is it conducive to encouraging enterprises to further reduce their quota.”

In addition, the State Grid believes that local conditions are different, and there is a big difference in operation and maintenance. At this stage, it is not appropriate to define a uniform operating and maintenance cost standard. “According to the experience of domestic and foreign supervision of the operation and maintenance of monopoly industries, it should be verified and verified according to actual occurrence data. Maintenance fee level, supervision and review and disclosure separately." Another major topic is the return on equity capital. State Grid hopes to increase the current rate of return on equity capital. It is determined by adding 3 to 5 percentage points to the interest rate of long-term Treasury bonds, which is "easy to use for listing financing and state-owned capital maintenance and appreciation."

Li Chengren, an expert on electricity prices at the State Grid Energy Research Institute, told reporters that the interest rate on national debt is 4% to 5%, which is far lower than the internationally established level of reasonable returns for grid companies. %the above".

At the meeting in Changsha, a number of provincial executives complained that the current electricity prices are low, many investments, lack of funds, low profit or even losses... Finally, the relevant leaders of the Price Division of the National Development and Reform Commission interrupted: “If the transmission and distribution prices cannot be implemented, consider the power grid. The problem is no way!"

The worries of the industry a few years ago that the National Development and Reform Commission conducted a trial on the transmission and distribution price reforms in Guangdong and the result was nothing. The relevant officials of the National Development and Reform Commission’s Price Division concluded the reasons for the failure of the pilot project, arguing that it was mainly due to the fact that “the reform of the system was not in place at that time; in addition to the frequent deployment of assets between provincial companies in the province during the period of the power grid; the intensity of work was not sufficient”.

The research on transmission and distribution prices initiated last year also has many problems that have not been resolved. State Grid believes that the existing regulations “are focused on restricting the transmission and distribution costs. The tight determination of the scope of effective assets and the low verification of transmission and distribution cost standards basically do not reflect the operating incentive mechanism for power grid companies, which is not conducive to encouragement and guidance. Power grid companies actively strengthen cost control, "complete data acquisition and scientific and rational methods of calculation are currently facing major difficulties, and they hope to relax time requirements for research on transmission and distribution prices."

The relevant personage of China Electric Power Enterprise Association stated that “if the transmission and distribution price is not difficult, we should calculate the effective assets, and need to be stripped; then clarify the relationship between the audit, the regulator and the regulated person”.

Regarding the verification method for operation and maintenance fees proposed by the power grid, a senior person of the power generation company expressed great concern: “In other industries, a single enterprise may not be transparent, but the overall situation of the industry can be understood from various aspects; but the power grid is not the same, but it is a trade. It doesn't give you various data to run maintenance fees. You don't have a second source." "If it's approved, it may put in all kinds of fees. Is it reasonable? No one knows, information. The source is only in the hands of the grid company."

Some industry insiders also stated that some of the appeals of power grid companies do have their own rationality. “For example, the sub-rating of voltage levels is actually not difficult. It is the easiest way. However, the level standards of different power grids are inconsistent and cannot be applied across the board. Local distribution business 220KV or less of the distribution network, some areas are underdeveloped, electricity consumption is small, 110KV even if the distribution network, there is no uniform standard. If you follow the voltage level across the board, certainly not appropriate." A power industry source said .

The relevant person of CEC also stated that there are many real problems that cannot be solved in the distribution and distribution. For example, the distribution network of rural areas in some areas is very weak and there is a serious cross-subsidy. “The national grid uses the income of rich regions to subsidize the backward areas if With separate distribution and distribution, the distribution of power in the backward areas is no longer controlled."

The Supervisory Commission pointed out to reporters that 2011 is the beginning of the “Twelfth Five-Year Plan”, and that next year will be the tenth anniversary of the start of the reform of the power system. After undergoing the rapid development after the separation of the plant and the network, we experienced the separation of the main and auxiliary difficulties in production, and now we have to face more challenging separation of transmission and distribution. “However, independent transmission and distribution prices are the circumstances of the overall price reform. child".

"The price of transmission and distribution is not separated, and direct purchase of electricity by large users cannot be implemented. Direct electricity purchase is through the transmission grid, without going through the distribution network. Without separation, large consumers can pay for the distribution of electricity by purchasing electricity directly." A power company Veteran sources said that merely measuring transmission and distribution costs has encountered so many difficulties. "We see that the reform has entered the deep-water zone."

Regarding the reform of the power system, the relevant officials of the Development and Reform Commission’s Price Department spoke of a paragraph: The goal of reform is like a snow-capped mountain. Everyone can see it from afar; but the path to the snow-capped mountains is cloud-covered and I do not know how to reach it.

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