These companies will be at the same administrative level under central government oversight. The other is vertical breakdown. According to this model, first power plants will be separated from the grid companies. Then power providers will be separated from distributors. Finally, transmission will be monopolized by the central government.
Ongoing reform is based on the latter model.
Liu says the government must hook up local networks into one national electric grid and then transform the State Power Corp into a genuine power network operator. Only then can market forces jumpstart the more efficient distribution of electricity. The linkup has begun in northeast and north China, and is expected to be complete by the end of this year. Since 1998, joint-venture plants have been established throughout the country, helping to break up industrial monopoly. Liu feels China does not have nearly enough.