What is marketization of electricity prices?

 

The "marketization" of electricity prices has landed, and real estate companies have begun to 'find out' and release the signal of "stabilizing people's livelihood". This is during the days of solar electricity generation power plants which are getting popular these days.

 

High-quality creators in the financial field

The marketization of electricity prices, which has been hotly discussed for a long time, finally landed.

 

The Economic Daily reported on October 12 that the National Development and Reform Department issued a notice to deepen the market-oriented reform of coal-fired power generation on-grid tariffs.

 It mentioned:

1. In principle, all coal-fired power generation electricity will enter the electricity market, and the on-grid electricity price will be formed within the range of "base price + fluctuating" through market-based transactions.

 

2. The fluctuation range of the trading price of coal-fired power generation market has been expanded from the current float not exceeding 10%, not exceeding 15% in principle, and expanded to not exceeding 20% ​​in principle. For high energy-consuming industries, the price formed by market transactions Not subject to the 20% upward limit.

 

 

3. Promote all industrial and commercial users to enter the market, and cancel the sales price of industrial and commercial catalogues.

 

4. Residential and agricultural electricity prices remain unchanged.

 

To put it simply: the space for rising electricity prices has opened up, and industry and commerce have all entered the market. This is a key step in the marketization of electricity prices.

 

Since the beginning of this year, the price of coal has risen sharply, and the price of coal and electricity has been inverted, which is considered to be one of the reasons for the low production willingness of power generation enterprises and insufficient power supply.

 

It is important to know that the on-grid electricity price is the on-grid electricity price at the production end, and the sales electricity price at the consumer end. Intermediate cable losses, transmission and distribution losses, government funds and taxes, etc., generally account for about half of the electricity price on the electricity sale.

 

Regarding coal power, the coal-power linkage mechanism will be cancelled from the beginning of 2020 and changed to a "base price + fluctuating" market price mechanism.

 

In the past, the upper and lower ranges were 10% and 15% respectively, and industrial and commercial users did not fully enter the market.

 

In other words, power companies have no way to break the 10% price increase ceiling, and at the end of use, industrial and commercial users have not purchased electricity through marketization.

 

As a result, the cost of power generation is high, and the willingness to generate electricity is certainly not high when it is almost operating at a loss.

 

And this time, the adjustment of the fluctuation range of electricity prices officially opened the 10% mark.

 

Judging from the increase in electricity prices in the past few rounds, the largest increase in 2010 did not exceed 10% (7.63%).

 

According to Huaxi Macro's calculations, the steam coal futures price has exceeded 1,300 yuan/ton, and the coking coal futures price has exceeded 3,200 yuan/ton, both hitting record highs.

 

Therefore, it is expected that this round of electricity price increases will also be higher than in history, with a high probability of exceeding 10%, roughly between 10% and 15%.

 

The reform of the electricity price mechanism is conducive to straightening out the price inversion of coal and electricity. This will increase the willingness of electricity users to generate electricity to a certain extent. 

In particular, the lifting of upper limit controls on high energy-consuming companies will significantly increase the willingness of power generation companies to supply electricity, which will lead to power generation. Increased supply, alleviating the pattern of "electricity shortage".

 

The market certainly has expectations for electricity price increases

In order to ensure the supply of electricity and coal for this winter and next spring, the high-level meeting on October 8 has made it clear that the fluctuation range of market transaction electricity prices will be adjusted from no more than 10% and 15%, respectively, to no more than 20% in principle. Energy-consuming companies can exceed 20%.

 

This time, the development and reform department implemented more detailed measures to implement the high-level instructions on electricity prices, which is of great significance.

 

This year’s winter comes extremely early. When the heating season comes, electricity prices break the ceiling and ensure sufficient coal power supply is an important measure to stabilize people’s livelihood.

 

For real estate companies in the bitter cold, they have to find ways to survive this winter.

 

It is reported that the China Real Estate Association is expected to convene some real estate companies to hold a symposium in Beijing on October 15. Currently, companies have received notifications.

 

CBN reported on October 12 that the reporter learned from insiders of the China Housing Association that there was indeed a relevant meeting, which was organized by the Research Department of the China Housing Association.

 

The content of the meeting was to conduct a thorough investigation of the current problems faced by real estate enterprises and understand the corresponding risks.

 

Lan Bai felt that it was not so much as "understanding", but as "demolition".

 

How big is the real estate company's thunder this year?

From Evergrande to Henan Jianye’s late-night call for help, and then Sony Real Estate suffered a "Mid-Autumn Tribulation", Blu-ray’s debt of 21.5 billion yuan was on the verge of bankruptcy, Guangyao Group declared bankruptcy, and the top 100 real estate companies defaulted on their debts and downgraded their ratings. Headquartered in Beijing Modern Land has been on the verge of defaulting on its debt.

 

As of September 27, the cumulative number of defaulted bonds of real estate companies in 2021 reached 39, an increase of 25 over 2020, and the cumulative amount reached 46.75 billion yuan, an increase of 159% over 2020.

 

Key points: The bad debts of real estate companies have doubled this year.

At this time, layoffs and work stoppages will appear one after another.

This year, there have been more than ten real estate companies that have layoffs, involving Greenland, Evergrande, Agile, Jinke, Suning Real Estate, Fantasia, Sunshine City, etc., and most of the reductions in these companies are related to the merger and adjustment of internal organizations.

 

To put it nicely, it is called the merger of internal organizations. If it is awkward, it means that there is no money to pay wages.

 

If this continues, not only will the wave of defaults affect the financial system, it will also affect the income of local land transfers, which in turn will affect the fiscal health of all regions.

 

Therefore, what specific signals the China Housing Association will release in this event is worthy of the next focus.

 

No wonder the market is expecting this event. The China Housing Association is a non-profit organization registered with the Ministry of Civil Affairs. Its business department is the Ministry of Housing and Urban-Rural Development.

 

The China Housing Association itself will carry out policy research and special research on key industry and market hot issues. It also has the function of proposing policy and legislative recommendations on industry development to the senior level.

 

In fact, on September 29, the People's Bank of China and the China Banking and Insurance Regulatory Commission have jointly convened a seminar on real estate finance.

 

There are many departments participating in the conference with high standards: in addition to the central bank and the China Banking and Insurance Regulatory Commission, there are also the Ministry of Housing and Urban-Rural Development, the China Securities Regulatory Commission, and 24 major banks across the country.

 

More importantly, this is a special meeting for real estate, which can be used as a basis for us to judge the future direction of the real estate market.

 

 

Mentioned in this forum:

1. Focusing on the goal of "stabilizing land prices, housing prices, and expectations", the financial sector accurately grasps and implements the real estate financial prudential management system;

 

2. Financial institutions shall, in accordance with the principles of rule of law and marketization, cooperate with relevant departments and local governments to jointly maintain the steady and healthy development of the real estate market and safeguard the legitimate rights and interests of housing consumers.

 

Pay attention to the key words: accurately grasp the real estate financial system, maintain the stability of the real estate market, and safeguard the housing consumers.

 

From this perspective, the China Housing Association convened the vice presidents of real estate companies to come to Beijing for a meeting in order to implement the policies of the high-level departments.

 

The signal released behind it is worthy of careful consideration.

 

If the real estate enterprises collectively "lay flat", it will not only endanger the real estate industry itself, but also a major issue related to people's livelihood, financial security, and local finances.

 

 

What should I do if the real estate is unfinished? How many home buyers' savings will go to naught?

What should I do if there is a large number of bad debts in the bank, and even a run?

 

There is no real estate company to participate in the auction of the land, what about local debt, salary, and urban infrastructure?

 

Real estate is also the livelihood of the people. It cannot rise sharply or explode.

 

In the same way, if electricity prices are not market-oriented, power plants will generate electricity at a loss, and coal prices will be high, which will affect the start of the manufacturing industry and even the electricity consumption of residents and urban life. This is also the livelihood of the people.

 

To put it simply: the "marketization" of electricity prices has landed, and real estate companies have begun to "find the bottom", all of which are releasing signals of "stabilizing people's livelihood".

Winter is very close to spring, but only through the dignified winter can we see spring.