Cailian News, November 11th – The State Energy Administration Comprehensive Department issued a notice regarding further standardizing behaviors in the electricity market transactions.

The notice proposes that each operating entity should further standardize market quoting behaviors, comprehensively consider unit fixed costs, fuel costs, energy supply and demand, etc., to make compliant quotes, promote trading prices that truly and accurately reflect the value of electrical commodities. It is not allowed for the relevant operating entities on the generation side and the sales side to unilaterally agree on trading prices, electricity quantity, and other declaration elements in the medium and long term through online or offline methods to achieve specific transactions.

National Energy Administration Comprehensive Department Notice on Matters Related to Further Standardization of Electricity Market Transaction Behaviors

National Energy Administration Comprehensive Department Regulation No. 148 of 2024

All dispatching institutions, State Grid Corporation of China, China Southern Power Grid Co., Ltd., China Huaneng Group Co., Ltd., China Datang Corporation Ltd., China Huadian Corporation, State Energy Investment Group Co., Ltd., State Power Investment Corporation, China Three Gorges Corporation, State Development Investment Corporation, China National Nuclear Corporation, CGN Power Co., Ltd., China Resources (Group) Co., Ltd., Inner Mongolia Power (Group) Co., Ltd., Beijing, Guangzhou Power Exchange Center, relevant power generation companies:

Recently, the State Energy Administration has focused on the construction of a unified national electricity market, successively organized comprehensive supervision in the electricity sector and special supervision on prominent issues in the electricity market order. During the supervision, it was found that some operating entities violated market trading rules, implemented collusive quoting, etc., harming the interests of other operating entities. In order to effectively prevent market operation risks, further standardize the trading behaviors of operating entities, ensure the electricity market's unity, openness, competition, and orderliness, in accordance with relevant laws and regulations such as the "Electricity Regulation", "Basic Rules for Electricity Market Operation", "Electricity Market Regulation Measures", the following matters are notified.

1. Fully implement the requirements of the national unified electricity market construction deployment

All operating entities, electrical market operation institutions, and electrical market management committees must comprehensively implement the requirements of the Third Plenary Session of the Twentieth Central Committee of the Communist Party of China on the deployment of the national unified electricity market construction, accelerate the construction of a nationally unified, open, orderly competitive, safe and efficient, and well-governed electricity market, operate in accordance with laws and regulations, and shall not engage in exclusive behavior or unfair competition in the electricity market by using market power or colluding with other operating entities.

Continuously promote compliant transactions for operating entities.

All operating entities should consciously maintain a fair and just order in the electricity market, strictly abide by the rules of the electricity market and relevant national regulations, participate in electricity market transactions in accordance with laws and regulations, shall not abuse market dominance to manipulate market prices, and shall not engage in collusive quoting, price manipulation, or disrupting market order.

Power generation enterprises with a retail electricity sales company shall not seize market share by directly or indirectly lowering the purchasing costs of their affiliated retail electricity sales company using the advantage of integrated generation and sales operations, and shall not discriminate against various types of retail electricity sales entities and large electricity consumers.

The electricity market management committee should fully play the role of market self-discipline and social supervision, further strengthen internal market self-discipline management, urge market members to sign self-discipline conventions and regulate implementation.

Focus on regulating market quoting activities.

All operating entities need to further regulate their market quoting behaviors, objectively consider fixed unit costs, fuel costs, energy supply and demand, etc., to provide compliant quotes, promote transaction prices that truthfully and accurately reflect the value of electricity commodities.

In principle, each operating entity should independently quote based on the market registration entity unit. Operating entities shall not collude on quoting through verbal agreements, contract signing, and other means. Power generation enterprises composed of multiple power plants conducting electricity trading shall not make centralized quotes.

(VII) The operation entities on the power generation side and power sales side are not allowed to negotiate specific trades through online or offline means between them, and must not agree on trade prices, electricity quantity, and other declaration elements outside of long-term bilateral negotiations.

4. Regularly conduct market monitoring and analysis.

(VIII) The electrical market operation institutions should follow the principle of "who operates, who guards against risks; who operates, who monitors", fulfill their responsibilities for market monitoring and risk prevention, conduct monitoring of violations of trading rules, collusion in quoting prices, etc. according to regulations, report problems to the relevant dispatching agencies in a timely manner, and submit monitoring summaries to the National Energy Administration and dispatching agencies every six months.

5. Continuously strengthen daily supervision.

(IX) Each dispatching agency must effectively fulfill its regulatory responsibilities, comprehensively utilize on-site inspections, off-site supervision and other methods, promptly discover problems disrupting the market order, urge relevant operating entities to rectify seriously. At the same time, increase law enforcement efforts, and strictly investigate and deal with illegal activities found in accordance with the "Electricity Regulation Regulations" and the "Electricity Market Supervision Measures".

(X) All operating entities, electrical market operation institutions, and electricity market management committees, when discovering relevant problem clues, should promptly report to the local dispatching agency. In the case of major issues, the relevant dispatching agencies shall report to the National Energy Administration as required.

National Energy Administration Comprehensive Department

November 8, 2024.