In July 2003, the State Council issued Power Tariff Reform Program (GBF[2003] Document No. 62), on which a basic ideology of power tariff reform for setting up a clear and hierarchical power tariff system and corresponding pricing mechanism was put forward on the basis of steady progress of power institutional and market reform, in the meantime, the normalized, transparent and efficient power tariff supervision system would be built up. The Program involves five aspects, namely price separation for power plant and power grid, electricity price to grid, transmission and distribution prices, retail price and power tariff managing system.

Along with implementation of bidding for access to grid, the newly built and existing nuclear power having appropriate conditions will also participate in market competition, besides conventional hydro and thermal power. The wind power, geothermal power and other new energy and renewable energy enterprises will temporarily be free from market competition, but their electricity generated shall be purchased prior by the power grids on government quoted price or bidding price. Competitive market for new energy and renewable energy will be set up when conditions matured.

An independent transmission and distribution pricing system adaptable to the business will also be set up. The reform of retail price shall aim at enabling all consumers having rights to freely select their power suppliers and the price to be regulated by market.