China rewrites how it pays for electricity transmission — tightening cost audits and splitting pricing by grid type

China's state planning agency just issued four new binding rules for how electricity transmission companies get paid. The rules tighten cost audits, separate pricing for provincial grids from regional grids from cross-border lines, and define exactly what counts as a legitimate cost. This means transmission companies can no longer bundle costs together or hide inefficiencies — every expense gets scrutinized, and different grid operators face different pricing formulas based on what they actually operate.

For decades, Chinese transmission companies operated under pricing rules loose enough to absorb inefficiencies and cross-subsidize unprofitable lines. These new rules force granular cost accounting and separate pricing by grid type, which means inefficient operators lose the ability to hide losses in aggregate numbers. The structural shift is from bundled pricing (one formula for all transmission) to disaggregated pricing (different rules for different grid types). This creates pressure on operators to cut costs or justify them line-by-line. It also signals that Beijing is moving toward cost-based pricing rather than political allocation — a shift that will eventually affect how much renewable energy gets transmitted (cheaper lines get priority) and which regions subsidize which.