Abstract:

In view of China’s restructuring of its electric power system,the surplus loss caused by the price regula-tion by the government in the period of inelastic electricity supply is quantitatively analyzed,indicating that power generation companies as well as grid corporations have to face a crisis in their operation even in a period when an urgent electricity demand occurs,because the electricity price cannot adequately reflect the relationship between supply and demand.The impact on the price resulting from the purchasing of energy generated by small units is then evaluated,and the aggregate benefit before and after the purchasing of high-price electricity is compared.It is concluded that a surplus-based pricing mechanism can help achieve an equilibrium in benefit between the supplier and the consumer.This conclusion is also verified by a case study.

Key words: electricity market, benefit analysis, insufficient electricity supply, social surplus, surplus-based pricing