Big case emerges! Almost all power generation enterprises in Shanxi Province are involved in

  Recently, almost all power generation companies in Shanxi province have been involved in an anti-monopoly case.

  At the hearing of the case, the trade associations and enterprises suspected of signing price monopoly agreements argued that the "Anti-Monopoly Law of the People's Republic of China" was not applicable to the electricity market and that the economy was sluggish. . However, the law enforcement agency believes that the parties involved in the case effectively implemented the monopoly agreement and violated the relevant provisions of the law, and should be subject to administrative penalties.

  A reporter from the "Economic Information Daily" learned that in April this year, a total of 25 parties from thermal power companies such as Shanxi Electric Power Industry Association and Guodian Shanxi Branch were issued a "Advance Notice of Administrative Penalty" by the Shanxi Provincial Bureau of Price Supervision, Inspection and Anti-Monopoly . In the notice, the law enforcement agency put forward suggestions on administrative penalties for these agencies and enterprises, and proposed to impose a total of more than 130 million yuan in fines on the parties.


  The case can be traced back to January 24, 2016. At that time, the Shanxi Electric Power Industry Association organized some thermal power companies to hold a symposium on direct supply of thermal power companies to large users at the Xishan Hotel in Taiyuan City. At the meeting, 9 power groups and 15 independent power plants signed and passed the Shanxi Province Convention on Preventing Malicious Competition and Safeguarding the Healthy and Sustainable Development of the Industry. and power generation enterprises, in accordance with the principle of cost plus meager profit, calculate the lowest transaction quotation of direct power supply for large users, and publish and implement after the weighted average of provincial power industry associations. 0.02 yuan/kWh.

  In fact, since 2013, Shanxi has started direct power supply transactions for large users as a pilot province, which is regarded by the industry as a breakthrough in promoting the reform of the national electricity market. Subsequently, the transaction volume of direct power supply by large users in the province has increased year by year.

  In the context of the reform of the electricity system in Shanxi Province and even the whole country, this is the first influential electricity price monopoly case. Based on reports from electricity-using enterprises, the law enforcement agency believes after investigation that there are multiple evidences showing that the units involved have implemented monopoly agreements at agreed prices, with a transaction volume of about 25 billion kWh (accounting for more than 85% of the second batch of transactions), and the transaction volume Nearly 8 billion yuan.

  After the "Advance Notice of Administrative Penalty" was issued, 19 units, including Shanxi Electric Power Industry Association, Huadian Shanxi Energy Co., Ltd., and Shanxi Branch of Datang Group Corporation, had objections to the proposed administrative penalty and filed a hearing application. During the hearing, the units involved and the law enforcement agencies had a heated debate.

  The Shanxi Electric Power Industry Association, together with a number of enterprises and their lawyers, made a number of defenses. The main reason was that although the Convention was signed, it was still being revised, and it has not been officially printed and entered into force, so it should not be considered implemented; the electricity market is an incomplete market. Shanxi’s economy is in a period of downturn; Shanxi thermal power companies are currently facing great difficulties and overcapacity; similar situations exist in other provinces, and various players in the power market are facing complexities in the reform and exploration stage. nature and arduousness, so trial and error etc. should be allowed.

  The law enforcement agency believes that the absence of the Convention does not affect the conclusion of the monopoly agreement. The conclusion and implementation of the monopoly agreement depends not only on the purpose, but also on the action and the consequences of the action. The parties in this case trade according to the agreed price range, which is valid Implemented monopoly agreements. The electric power industry association organizes enterprises to agree on the transaction price of direct power supply, which belongs to the organization of operators in the industry to reach a price monopoly agreement. These all violate the relevant provisions of the anti-monopoly law.

  A number of experts commented on the defense of the parties involved in the case in an interview with a reporter from the "Economic Information Daily"

  The Shanxi Electric Power Industry Association proposed that "Shanxi thermal power companies have serious overcapacity, and the utilization hours have fallen sharply to the lowest level in history."

  In this regard, Su Hua, an associate researcher at the Chinese Academy of Social Sciences, pointed out that due to the economic downturn, monopoly agreements between competitors to alleviate the decline in sales or overproduction are commonly known as "crisis cartels". Like other types of monopoly agreements, crisis cartels. It can distort competition and push up prices, but it cannot fundamentally solve the cyclical and structural overproduction, and it does not meet the purpose of my country's overcapacity reduction, supply-side reform, and cost reduction for real enterprises. "If there is no 'crisis cartel', companies tend to respond more effectively to market and technological progress, and then exit the market or get out of the crisis faster." Su Hua said.

  Wei Yingling, a lawyer from Jun He Law Firm, pointed out that if the industry associations and enterprises involved in the case claim exemptions based on Article 15 of the Anti-Monopoly Law, they must prove that their agreements will not seriously restrict competition in the relevant market and enable consumers to share the resulting profits. Benefit. If the proportion of transactions completed under an agreement is high, it is often difficult to demonstrate that the agreement does not significantly restrict competition in the relevant market. Judging from the practical experience of global anti-monopoly, the exemption of price monopoly agreements should be very cautious, otherwise enterprises will be accustomed to engaging in such activities, and then face greater anti-monopoly risks in domestic and foreign markets, which will be very unfavorable to Chinese enterprises in the long run "Going out" to participate in international competition.

  Regarding the arguments of the parties involved such as overcapacity and the inapplicability of the Anti-Monopoly Law to the electricity market, Shi Jianzhong, vice president of China University of Political Science and Law, said that my country's promotion of overcapacity reduction and supply-side structural reform is an active act that follows the laws of the market economy and requires full The fundamental role of the market mechanism and the guiding role of the government shall be brought into full play, and the overcapacity shall be resolved by means of the rule of law and marketization. Enterprises should not interpret overcapacity as the fact that competitive enterprises can jointly limit prices without being bound by anti-monopoly laws.

  Shi Jianzhong pointed out that the anti-monopoly law is the economic constitution for enterprises to participate in market competition. There are no exceptions to the application of the Anti-Monopoly Law for the generation and sale of electricity where competition is introduced.

  Related Reading

  The first case of electricity price monopoly reveals hidden worries in the development of the power industry


  Source|China Energy Think Tank


  Author| Zou Zhaoxi

  Two months ago, the Anti-Monopoly Bureau of the National Development and Reform Commission, together with the Anti-Monopoly Bureau of Shanxi Province, had an interview with the Shanxi Electric Power Industry Association and the eight major power generation groups in the province. The Convention on Healthy and Sustainable Development (hereinafter referred to as the "Convention") has created a monopoly on electricity prices and issued huge fines, which is a semi-open secret in the industry. On May 18, in response to the application of the Shanxi Electric Power Industry Association and 18 coal-fired power generation enterprises, the Shanxi Provincial Development and Reform Commission held an administrative penalty hearing on the result of this penalty. A battle between monopoly and anti-monopoly, and the true and false market has finally stripped off its hazy coat and exposed it to the public eye.

  This event is like a blockbuster, attracting great attention from the industry. But when people turn their attention to the event itself, we seem to see what is hidden behind the event, and see the collective anxiety of the majority of power companies at present: to survive or to perish? Surviving or being incorporated? The core of the whole event is that the Shanxi Electric Power Industry Association "connects" a number of thermal power companies to formulate the "Convention", and jointly agree: According to market conditions, major power generation groups and power generation companies, according to the principle of cost plus small profit, calculate the lowest direct supply to large users. The transaction quotation shall be announced and executed after the weighted average of the provincial power bank. And reached an agreement that the price of the second batch of direct power supply transactions in 2016 will fall by no more than 0.02 yuan/kWh compared to the benchmark price. It looks like a monopoly, but it is not for profiteering, but a lower limit for losing money. What is the purpose of such a "monopoly"?

  The state vigorously promotes the marketization of power production and supply. Since March 2015, the Central Committee of the Communist Party of China and the State Council issued the "Several Opinions on Further Deepening the Reform of the Electric Power System", proposing to steadily promote the reform of the electricity sales side, and to open up the electricity distribution and sales business to social capital in an orderly manner. Later, two core documents, "Administrative Measures for the Access and Exit of Electricity Sales Companies" and "Administrative Measures for the Orderly Release of Distribution Network Business" were launched. A series of measures have high hopes by industry insiders and believe that they can break the status quo of the power grid monopoly to a certain extent. However, the reality is not as smooth as expected. In order to achieve monopoly, some enterprises suppress the price of the majority of production enterprises, sell electricity at a price far below the cost price, and squeeze the living space of small and medium-sized enterprises. According to statistics, in recent years, in many places in my country, the average price of direct supply from large users has been much lower than the benchmark electricity price and cost price, forcing other power companies to engage in price wars. For example, in Shanxi Province, according to the statistics of the Office of Energy Supervision, ten thermal power companies lost money in 2015, with a loss of 20%. In 2016, 33 of the 55 provincial thermal power companies lost money, with a loss of 60%. Behind the loss, the average cost of power generation in 2016 was 0.292 yuan/kWh, while the average transaction price of the first batch of direct power supply was only 0.133 yuan/kWh. This is a phenomenon of serious malicious competition in the process of electricity trading by some thermal power companies in order to obtain power generation, and they compete to sell electricity at prices far below the cost, disrupting the market.

  It is in this situation that Shanxi Electric Power Industry Association and power generation enterprises jointly formulated the "Convention". The result is: in the second batch of direct transactions with large users in Shanxi in 2016, the highest transaction price of each enterprise was 0.3205 yuan/kWh, which was the same as the benchmark electricity price just adjusted in January 2016, and the lowest transaction price was 0.295 yuan/kWh. It is 2 points lower than the on-grid electricity price, with a total profit of 600 million yuan for users. The "Convention" stipulates a lower price limit. Under the appearance of monopoly, it has the original intention of anti-monopoly, and has achieved certain results in regulating market behavior. However, there may be certain problems in the specific language and operation.

  In recent years, the development of electric power enterprises only seems to be prosperous. On the one hand, large-scale power supply companies are making an overwhelming low-price offensive, and on the other hand, the cost of coal power is rising. Small and medium power enterprises (especially thermal power) have less and less living space, but they have to passively engage in price wars. It can be said that the result of the competition between the snipe and the clam can bring benefits to the electricity users in the short term, but in the long run, it is easy to form the control of the power supply oligarchs over the entire power supply market, including the pricing power. From this, we think of the competition between Didi and Uber. Didi has been in the online car-hailing market since 2012, and some other companies are eager to try. The biggest competition comes from Uber. During the market enclosure stage, the two parties sent a large number of car-hailing red envelopes to consumers, and at the same time gave a large amount of subsidies to drivers. The majority of consumers liked it, and even did not drive their own cars, they used online car-hailing. In less than three years, the struggle between the two giants of car-hailing ended with Didi's acquisition of Uber's business in China. The worst victims were those who wanted to share the car-hailing cake. Without competitors, Didi’s current discounts are pitiful, and the cost of taxis for users is no different from that of ordinary taxis. The difference is that people are accustomed to online car-hailing, and the first thing that comes to mind when they want to ride online is Didi. Similar examples include the battle between princes in ordering meals online, and the battle for hegemony between and Taobao. In the early stage, they burned a lot of money and fought price wars. With the battle between the giants, it was some small and medium-sized enterprises who suffered because there was not enough money. Financial support and they have died out. This is the tragedy of SMEs. The power industry is also inseparable from this circle.

  We know that the main energy forms of power production include thermal power, hydraulic power, wind power, nuclear power, photovoltaic and so on. Although thermal power requires non-renewable resources such as coal, and causes pollution and environmental protection reasons, production is limited to a certain extent. , wind energy, nuclear energy, etc. have received a lot of policy support to encourage development. But there is no doubt that with the continuous improvement of my country's economic level, the absolute demand for electricity will also rise. Due to technical, regional and other constraints, the energy structure dominated by thermal power generation will not be changed for at least ten years in the next ten years. The growth rate will still be higher than the growth rate of electricity consumption. According to data, in 2016, my country's thermal power generation accumulated 4,395.8 billion kWh, a year-on-year increase of 2.6%, accounting for 74.37% of the country's power generation. At present, the right to speak in thermal power generation is basically in the hands of a few giants. If small and medium-sized enterprises want to continue to get a piece of the pie, it is purely self-defeating to follow the price war. If you want to occupy a place in the smoke-filled power market, you need to have a long-term vision, clear positioning, pay attention to strategies, comply with national policies, and be driven by customer needs.

  In view of the current energy structure and industry development characteristics, combined with the five production links of power generation, transmission, substation, distribution, and electricity consumption in the power industry, we put forward the following suggestions for small and medium-sized power enterprises:

  1. Survival is the first factor. As long as a certain amount of production is maintained, there will be a time for a comeback. It takes money to fight a price war. Even for some giant companies, it will carry a heavy burden and it is difficult to last. It is better to be wise to protect yourself and survive the cold winter to wait for the opportunity to join in the price melee;

  2. Under the circumstance that the status of the giant in the thermal power field has been unshakable, we can avoid its edge and take the opportunity to deploy new energy sources. It is predicted that by 2066, the installed capacity of my country's power system may reach 6 billion kilowatts, with solar power generation as the main form and other forms as auxiliary forms. The market is big enough, the current situation of thermal power is difficult to break, and the field of new energy is still a blue ocean;

  Third, adapt to the trend and take the lead in the energy Internet. In the future, electricity production and marketing must be based on the market