Power Transmission Units Rise in Cost and Strengthen Cost Management

On the 15th, the State Electricity Regulatory Commission announced that during the 11th Five-Year Plan period, market competition and other factors contributed to the decline in the unit cost of thermal power projects, thereby curtailing the price of electricity and reducing the power for rising prices; however, the unit cost of transmission projects rose during the same period. The report of the China Electricity Regulatory Commission pointed out that the internal driving force of grid companies' cost control is less than that of thermal power companies.

The China Electricity Regulatory Commission issued the “Circular on Monitoring the Cost of Power Projects Put into Production during the Eleventh Five-Year Plan Period” showing that during the 11th Five-Year Plan period, the final unit production cost for the production of thermal power projects dropped from 3,815 yuan/kW in 2006 to 3,745 yuan/kW in 2010. Yan Hong, director of the State Electricity Regulatory Commission for Power Transmission, said that the market's full competition has stimulated the enthusiasm of thermal power companies to strengthen project cost control. The increase in the production ratio of large-capacity and high-parameter units has led to a continuous decline in the unit cost of thermal power projects.

In sharp contrast to this, transmission engineering costs have shown signs of rising year after year. During the 11th Five-Year Plan period, the final unit production cost of the AC transmission line project was increased by 17.93% during the period of the 15th.

The thermal power and transmission projects face the same social inflation environment. Why did they show different cost control situations? In this regard, the Electricity Regulatory Commission pointed out that market competition still needs to play a greater role in the cost control of power grid projects. Compared with power generation companies, there is a gap between the internal power of grid companies' cost control. At present, China is a natural monopoly state in the field of power transmission, with only the State Grid and the Southern Power Grid.

In view of the fact that the cost of power engineering is an important part of the price of electricity, the vice-monitor of the Electricity Regulatory Commission Wang Yeping said yesterday that it will further strengthen the supervision of power engineering costs and encourage companies to strengthen cost management.