The price of electrical energy is relatively low, and the part of the cost that maintains system operation and mechanism settlement is separately listed in items such as system operation fees. When forming retail prices, electricity sales companies need to comprehensively consider the costs of power purchases, deviations, contract fulfillment, and business operations. Although the two types of prices appear to be calculated the same way, they actually cover different scopes. What users most easily perceive is the per kilowatt-hour electricity price; as long as the price of electricity purchased on behalf is lower, the electricity sales company will be at a disadvantage in price comparisons.

Misalignment of cost responsibility in inter-provincial and inter-regional electricity trading

In cross-province and cross-region electricity trading, the misalignment of cost responsibilities between inter-provincial priority power generation and green electricity trading causes the electricity purchase prices on behalf of the recipient provinces (mostly economically developed areas or electricity-importing provinces) to remain consistently low.

In the process of electricity physical transmission, cross-provincial power export heavily relies on system services provided by the sending province's internal grid, such as active power balance, reserve, frequency regulation, and voltage support. With the rapid increase in cross-provincial transmission of new energy, its intermittency and volatility force the sending provinces to coordinate internal resources such as conventional coal power and pumped storage to provide backup support, and to reserve substantial equivalent reserve capacity. According to the underlying logic of the "Notice on Improving the Capacity Electricity Price Mechanism on the Generation Side" (NDRC Price [2026] No. 114) issued by the National Development and Reform Commission and the National Energy Administration in January 2026, the costs incurred to provide reliable capacity and ancillary services should reasonably be shared fairly by the electricity users who benefit.

The current inter-provincial and inter-regional electricity trading settlement mechanism often treats electricity sent out as a single trading commodity, and the pricing formula mostly only includes the original generation cost and inter-provincial transmission price, with system operation fees (including ancillary service fees, capacity compensation fees, etc.) not included. When electricity is sent out as load withdrawal, the corresponding system operation fees are not shared. To maintain the balance of the power grid's revenue and expenditure, this implicit cost remains in the fund pool of the sending province and is shared by industrial and commercial users within the sending province, forming a cross-subsidy pattern where in-province users subsidize electricity sent out.

Due to cross-provincial transactions not including the system operation fee in the delivery cost, the recipient provinces are able to obtain inter-provincial green electricity and priority generation electricity at costs lower than the actual system cost. This part of the cheap incoming electricity is injected into the agent purchase electricity pool as part of the recipient province's gateway power, forming the basis for maintaining low prices in agent electricity purchases. When electricity sales companies compete in the provincial spot market, they cannot enjoy the benefits brought by cross-provincial transfer costs, putting them at a disadvantage in price competition.

Market impact

The anticipated price advantage for industrial and commercial users entering the market is gradually weakening as the price of electricity purchased on behalf of users continues to decline. After observing for several consecutive months that the electricity procurement price through the grid is lower than or close to the retail company price, users will reassess the necessity of market-based electricity purchases, and some users tend to withdraw from retail contracts or reduce contracted electricity volumes.

The electricity sales company's quotation needs to cover comprehensive costs such as load forecast deviations, performance guarantees, capital occupation, and settlement fluctuations. When the purchasing electricity price is taken as a directly comparable low-price benchmark, the sales company's prudent quotation is easily seen as lacking competitiveness, putting normal operating space under pressure and weakening its enthusiasm for carrying out load management, portfolio procurement, and value-added services.

In the long run, the enthusiasm of industrial and commercial users to directly enter the market will be frustrated, and some users who should have discovered prices through the market and formed risk-sharing mechanisms will return to a wait-and-see state, hindering the effective transmission of price signals on the user side. Clarifying the cost boundaries between agency-purchased electricity and market-based electricity, and standardizing the comparison criteria so that different purchasing methods can compete fairly under equal conditions, is the only way to stabilize users' market entry expectations, maintain the order of the retail market, and promote the deepening of electricity market reforms. (This article only represents the author's personal views)