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Further Promoting the Energy pricing Mechanism Reform: Difficulties, Focal Points and Policy Options (No.25, 2019)


By Deng Yusong, Institute of Market Economy, DRC

Research Report, No.25, 2019 (Total 5525) 2019-3-5

Abstract: Over the last four decades, the reform of energy pricing mechanism has scored impressive achievements with a continually enhanced energy pricing mechanism which is playing an increasingly significant role in accelerating resource optimization and distribution as well as adjusting the relationship between supply and demand. However, there are still many difficulties and problems facing the energy pricing mechanism reform. For example, the energy institutional reform lags relatively behind, the contradiction of cross-subsidies remains to be fundamentally resolved, the conduction mechanism of energy prices calls for further improvement, and the relationship between consumer rights protection and their impact on producers which aims to form a relatively stable expectation and motivation still needs to be rationalized. To propel the energy pricing mechanism reform, special attention need to be paid to the relevant work of refined oil, natural gas and electricity pricing. Besides, effort need to be made to not only solve the inherent problems of energy pricing mechanism itself, but also take industrial and its relevant supporting reform into an overall plan. Here are the policy options offered to enhance the reform: work needs to be done to establish a multi-layered energy market system and its corresponding balance mechanism for energy supply and demand through the energy pricing mechanism reform so as to properly handle the cross-subsidy issue; the road map and the schedule for the reform need to be further refined, and comprehensive supporting policies need to be improved in order to push forward the reform in a systematic manner.

Key words: energy, price, reform