A review of residential tiered electricity pricing in China

At present, the unformed market-oriented pricing mechanism has become a great challenge faced by China's electricity pricing. And the unreasonable electricity pricing caused by cross subsidization has become increasingly serious with the economic development and energy shortage. Tiered electricity price (TEP), which was developed and used since 1970s, was introduced into China as a new electricity pricing method for residential electricity consumption. The TEP can also improve the tariffs, the behaviors and the efficiency of residential electricity consumption. In this study, we use the fundamental theory of the Electricity Economics to analyze the pricing methods and the forms of China's power market with the reform of electric power industry. We also point out the characteristics of residential tiered electricity pricing in China, which is also compared with other countries, such as the United States and Japan. The main factors influencing the residential tiered electricity pricing design are discussed in this paper from the perspectives of users, the electric power enterprise and government regulation. Then we point out the main problems of China's existing tiered electricity pricing, including inadequate level of public awareness and acceptance, unreasonable tiered and electricity price standard, insufficient reflection in regional differences, less combination with other electricity pricing forms, and low-level of smart meter application.