China's watchdog for the electricity industry, the State Electricity Regulatory Commission of China (SERC), will introduce a certification system from the start of next month to improve regulation of the industry.

Separate certificates will be issued to companies in the power generation, transmission and supply sectors after government approval, SERC said on Friday.

Power firms need to provide information about such things as their business portfolios, financial status and environmental performance for assessment.

Those that do not comply with the SERC-set regulations will not be allowed to continue trading.

According to the SERC regulations, all electricity transmission companies, 70 percent of the country's grid-connected power generation plants, as well as 150 to 200 electricity supply firms will have to apply for the certificates.

That figure will increase on an annual basis until 2010 when all firms involved in electricity supply will have to hold the new certificate.

China, the world's second-biggest energy consumer after the United States, is deepening reforms in the electricity sector by introducing more market mechanisms.

This is part of the government's move to split the big State power monopoly into several electricity generation and distribution companies.

"The previous market regulation system does not fit with the current situation," said Shi Yubo, vice chairman of SERC, at an electricity conference that concluded on Friday in Beijing.

Shi said the government will be able to maintain "proper" control over the electricity sector with the new system, thus encouraging fair competition within the expanding power sector.

Industry analysts said the move will not have a "substantial" impact on the country's power companies. "It will be of more significance for framing the industry's legal system than for closing down power plants or transmission firms," said Wei Bin, a senior analyst with the State Power Economic Research Center.

But obstacles still exist because the current electricity law also details a similar framework regulating power supply companies, Wei added. "There are some overlaps with the two," she said.

(China Daily November 21, 2005)