When demand and supply are balanced, or supply slightly exceeds demand, the administrative departments fail to manage matters in a scientific or equitable manner. They have no contingency plans or regulations for this routine situation. Or, for another example, when supply is sufficient, suppliers still cannot slacken their quota. Suppliers also charge unauthorized fees under various names, seriously hindering the development of the electricity market. All these negative results show the Chinese electricity industry is in urgent need of reform in its administrative system.
Reform aims at replacing a centralized monopoly with decentralized competitive practices.
In principle, all power generation firms should become independent power plants, separated from the transmission networks in terms of both financing and personnel issues. All power plants should offers quotes to the transmission networks. The administrators of the power market collect and list the quotes in a computer database available to clients. Then the administrators start to feed back client responses until all power consumption requirements have been met. If a quotation is rejected, the plant cannot start generating.