Recently, eight national departments, including National Development and Reform Commission (NDRC), Ministry of Land and Resources (MLR), Ministry of Railways (MoR), Ministry of Communications (MoC), Ministry of Water Resources (MWR), State Environmental Protection Administration (SEPA), China Banking Regulatory Commission (CBRC), and State Electricity Regulatory Commission (SERC), jointly issued a notice, in which it was demanded that all official departments in each area should fulfill the requirements in Notice of Accelerating the Structural Readjustment of Industries with Overcapacity (No. GUOFA No.11 [2006]) in order to keep the electric power industry developed in good order. It was also demanded that in accordance with the present new situation and new problems, necessary measures should be taken to accelerate the readjustment of structure in electric power industry.

New Situation in Industry Development

In Notice of Accelerating the Structural Readjustment of Electric Power Industry and Promoting Orderly Development (Notice for short in the following part), the eight national departments have pointed out that, since June 2002, the scope of the commencing and commissioning of electric power industry has been greatly enlarged. However, during the process of accelerating the development of electric power industry, there have appeared such problems as disorder in power station construction, irrationality in power supply structure, degression in quality of power construction, increase in amount of safety accident, and lagging in electric network construction, as well as the imbalance between the production and supply of power generating facilities.

Until now, related departments have absorbed unauthorized projects with a total of
42,830,000kw; another 46,000,000kw has been temporarily postponed and brought into the construction program in 2006 and 2007; the rest 34,000,000kw has been suspended. However, unauthorized projects in some places have not been postponed or suspended as demanded.

The proportion of small coal power and oil power units and the proportion of coal power have increased. This situation has deteriorated the power supply structure, and also goes against the utilization of energy resources.

Problems such as great increase in power supply and demand, aimless construction of unauthorized power supply projects, and incoordination between construction of power supply and electric grid have appeared again. The grid frame of some parts is not strong enough, which results in the coexistence of surplus and shortage of electric power.

Factories manufacturing power plant facilities throughout the country have been working overloaded. In 2006, the power generating facilities ordered in contracts are as many as 140,000,000kw but only 67,000,000kw in 2007. As the peak of power station construction has passed, it may happen that factories that manufacture power plant facilities in our country will experience capacity's overmuch and output's violent ups and downs.

The large scope of recent power station construction makes it common to speed up work just to complete within the construction period. Enterprises concerning power station design and construction and its facilities have been working overloaded, potential problems brought by which cannot be ignored.

The Emphasis on Work in Five Aspects

The eight national departments demanded that, during the period of the Eleventh Five-year Plan, in order to make the electric power industry develop in good order and to accelerate the structural readjustment of electric power industry, official departments in each place should emphasize on work in five aspects:

Firstly, improve power planning to make it develop orderly. NDRC will further improve power planning in each area during the period of the Eleventh Five-year Plan. Power station projects in 2006 and 2007 should be constructed according to the definite plans of NDRC. Development and reform departments in each area should arrange the work in early stage orderly according to these plans, and get done with project application and management. Projects constructed in 2008 and after can be fixed according to plans and further research on actual condition of market development.

As electric capacity installation increases, grid construction should be highly emphasized. Keep the development of power supply and grid, and the transmission and distribution of electricity coordinately. Grid companies have to make great efforts to improve their ability to transmit electricity by certain facilities.

Secondly, take up steps to put projects construction in order. Every area and related departments should carry out follow-up measures to clear up unauthorized power stations. Related functional departments of land resources, environmental protection, communications and water resources as well as comprehensive economic management divisions in each place should not issue related documents to unauthorized projects which haven't been included in the plan and whose operation are not within the planning period. Grid companies cannot connect unauthorized projects into the system. Banks and commercial institutions should stop granting loans to these projects.

Factories manufacturing power facilities should, according to the regulation and laws and certain rules of the state, appropriately handle the invalid contracts concerning unauthorized projects, and arrange production in accordance with the national plans.

Thirdly, strengthen the process of suspending and focus on structural adjustment. Mainly carry out electricity generating projects that is effective and environment complying; strengthen the exploration in hydroelectric power and nuclear electric power projects with long construction periods; increase the proportion of clean energy, such as hydroelectric power, in the electric power structure; actively push forward projects of thermal power generation units, that meet the requirement of "setting up large scale projects rather than small scale ones, and setting up coal power projects rather than oil power ones", try to realize the aim that, during the period of the Eleventh Five-year Plan, suspend 15,000,000kw small units of steam turbine coal power generation with a capacity of 50,000kw or below, and 7,000,000kw of old small units of oil power generation.

Fourthly, adjust controlling rules of power generation and bring into effect control that is energy saving, environment protective and economic. Discard the old rules that equally divided the working hours on variety of the generating units. Put in priority the generating units that are renewable, effective and low pollutant-discharged. And limit those generating units that consume more energy, discharge more pollutant, and disobey regulation and rules of the state. Mainly optimize the thermal power generation units; encourage the generating units which consume less coal, discharge less waste and use less water; any units which are within the suspending period or disobey rules of the state cannot be allowed to trade in the electric power market.

Fifth, ascertain the responsibilities and improve the quality and safety management of electric power construction.

Editor: Yan