With the head of China's power watchdog, the State Electricity Regulation Committee, smiling as he rang a gong, China's second simulated regional power market went online in Shanghai on Tuesday. The event was another big step toward marketization of the electric power sector.

In this phase, the simulation will include market registration, monthly offers, transaction listings, information release and regulation programs. A total of 171 power generators, with a combined installed capacity of 43.4 million kW in 59 power plants, are participating in the simulation.

Based on the east China power grid, the simulated market will cover the commercial hub of Shanghai and the four adjacent provinces of Zhejiang, Jiangsu, Anhui and Fujian.

The simulations are part of the response to an earlier government circular calling for acceleration of reform in the monopoly sectors. Market access restrictions will gradually be loosened and competition introduced.

Just four months ago, the nation's first power market simulation began in the northeast power grid, where the provinces of Heilongjiang, Jilin and Liaoning form one of the country's largest industrial bases.

"Power marketization is in line with the general requirement to build a sound socialist market economy. This reform enables coordination between the power sector and other sectors," said Chai Songyue, director of the State Electricity Regulation Committee.

Turnover was 3.3 billion kWh in the first peak hour and 1.2 billion kWh in the first valley hour. The figures indicate that the simulation was launched successfully.

Provincial power companies in the region will buy electricity on the regional power transaction platform.

Contracts now are mainly year- or month-based. With the updating of technical support, daily and real-time contracts will be available, according to the operation staff.

"Only by deepening the reform can the power sector achieve comprehensive, coordinated and sustainable development," said Chai.

(Xinhua News Agency May 19, 2004)