Recently, National Development and Reform Commission (NDRC) and National Energy Administration of P. R. China jointly issued the Trial Implementation of Supervision and Examination on Price Cost of PTD, aiming at profoundly promotes the price revolution of Power Transmission and Distribution (PTD), and establishes a restriction mechanism on cost of power grid enterprises.

This Trial has clearly stipulated the composition and collection methods of PTD cost and the inspection and verification criterions for main indicators, reflecting the principle of reasonable collection. It clearly defined that the power grid assets should be bound up with PTD business, cost or expenses should be reasonably collected based on voltage classes, services and users’ category, which is the basis of defining PTD price based on voltage classes and users’ category and estimating the cross subsidization of power price;

The Trial also reflects the principle of strict inspection and verification that all the unreasonable factors should be removed from the cost, the Trial stipulates 8 cost categories cannot be added into the price cost, management cost should be defined strictly, and the cost that is higher than average price in the industry should be reduced properly;

The Trial stipulates also the distinguish between stock assets and increment assets that the inspection and verification criterions on increment assets should be stricter than the ones for stock assets;

At last, the Trial request the common supervisory of every related Departments on auditing and approval of assets and some of the price and cost to strengthen supervision on power grid enterprises’ costs.

NDRC states that supervising PTD price and cost is a major means to strengthen management on power grid enterprises and establish a cost restraint mechanism, and is an important prerequisite of setting scientific PTD price. The Trial is the first measure that has ever been put forwarded in China to supervise the cost of super-large network-based natural monopoly industry, marking the Government management on power grid enterprises’ cost has stepped into a new, scientific and systematic stage. Up to now, NDRC has designated personnel to implement inspection and verification based on the Trial in Anhui, Hubei, Ningxia, Yunnan and Guizhou who have been chosen as pilot provinces to do PTD price revolution.

The Trial will be mended and completed in accordance with the practice situations while the revolution is promoted deeper and deeper, as a consequence it will finally benefits the management on China’s monopolized industry cost and price.