China : Development of National Heat Pricing and Billing Policy

Abstract

Market-based reforms in China's urban centralized heating sector are essential to addressing the perpetual inefficiency of a sector built on welfare based principles. The reform of heat pricing and billing is a crucial part of overall heat reform, since it will commodity heat and thus create economic incentives to provide and use heat much more efficiently. Heat pricing and billing reform requires substantial changes in four interrelated areas: (i) transfer of heat payment responsibility from work units to consumers, a change from invisible to visible heat subsidies and an improved targeted subsidy system; (ii) determination of an economically efficient and equitable heat pricing system; (iii) promotion of heat metering, consumer control of heat consumption and consumption based billing; and (iv) improvement of the system of heat price administration.