How to deal with government funds and surcharges i

How to deal with government funds and surcharges in distribution business

in China, both market-oriented power users (implementing transmission and distribution electricity price plus market transaction electricity price) and non market power users (implementing sales electricity price) need to pay government funds and surcharges when paying electricity charges

this paper will try to sort out the current government funds and surcharges in China, and further explore how to deal with government funds and surcharges in power distribution business

what government funds and surcharges are there

at present, the government funds and surcharges levied with users' electricity charges include: agricultural loan repayment funds, national major water conservancy project construction funds, large and medium-sized reservoir resettlement late support funds, renewable energy development funds (renewable energy electricity price surcharges). Some provinces and regions have also levied local reservoir resettlement late support funds

agricultural loan repayment funds originated from the administrative measures for the collection and use of agricultural loan repayment funds (Cai Qi [2001] No. 820) issued by the Ministry of Finance in 2001. Its predecessor was the power construction funds that began in 1988. The agricultural loan repayment fund is mainly used to solve the problem of loan repayment for agricultural transformation, and the collection standard is 2 cents per kilowatt hour. The levy standard has continued until now

the national major water conservancy project construction fund originated from the Interim Measures for the administration of the collection and use of national major water conservancy project construction funds (CAI Zong [2009] No. 90) issued by the Ministry of finance, the national development and Reform Commission and the Ministry of water resources in 2009. Its predecessor was the Three Gorges construction fund, which began in 1992. The purpose of the national major water conservancy project construction fund is to support the construction of the South-to-North Water Diversion Project, solve the follow-up problems of the Three Gorges project, and strengthen the construction of major water conservancy projects in the central and western regions. The standards for the collection of national major water conservancy project construction funds vary from province to province, and are currently roughly between 0.21 and 0.73 points per kilowatt hour. The collection of the national major water conservancy project construction fund is expected to stop at the end of 2019

the late support fund for large and medium-sized reservoir immigrants originated from the opinions on improving the late support policies for large and medium-sized reservoir immigrants (GF [2006] No. 17) issued by the State Council in 2006, which is used to improve the production and living conditions of reservoir immigrants. The collection standard of the post resettlement support fund for large and medium-sized reservoirs varies from province to province, and is currently roughly between 0.26 and 0.62 points per kilowatt hour

the renewable energy development fund originated from the Tentative Measures for the management of renewable energy power generation prices and cost sharing (fgjg [2006] No. 7) issued by the national development and Reform Commission in 2006. Its purpose is to compensate for the difference between the renewable energy power generation price and the local desulfurization coal-fired unit benchmark price. With the rapid development of renewable energy, the levy standard of renewable energy development fund has been adjusted from 0.1 cents per kilowatt hour to 1.9 cents per kilowatt hour

is it reasonable to collect government funds and surcharges with electricity charges

some social costs related to the power industry, such as the cost of renewable energy support policies, are often very high. However, because such policies have significant social benefits (as well as future economic benefits), their costs need to be shared by all power users

it is a common practice in all countries to share the cost of industrial policies related to the power industry with all power users. Government funds and surcharges are essentially a kind of tax, but the purpose (to make up for the social costs related to the power industry), the object of collection (all or part of the power users), and the way of collection (levied with the electricity charge, so more electricity is used, more taxes are paid)

How are government funds and surcharges levied

government funds and surcharges are collected by provincial-level power enterprises when collecting electricity charges from power users. For non market power users, government funds and surcharges have been included in the sales price of most provinces and regions; For market-oriented power users, the provincial power transmission and distribution prices of most provinces and regions do not include government funds and surcharges, but the provincial power transmission and distribution prices of a small number of provinces and regions (such as Liaoning, Jilin, Heilongjiang, etc., and adopting the current 4-octave frequency technology) include agricultural loan repayment funds

the office of the Financial Ombudsman of the Ministry of Finance in each province and region collects government funds and surcharges from provincial-level power enterprises on a monthly basis, and turns them over to the central treasury in full (the central finance generally pays the relevant power enterprises a commission fee of 2 ‰ of the actual levy)

for the agricultural loan repayment funds, the office of the Local Financial Ombudsman of the Ministry of Finance shall pay them to the central and local provincial Treasuries respectively in proportion, and the specific proportion of payment to the treasury shall be determined in principle according to the agricultural reconstruction loan plan approved by the state

for the national major water conservancy project construction funds collected by provincial power enterprises in 16 non beneficiary provinces, the local financial department is responsible for collecting them intelligently and flexibly, and turning them over to the provincial treasury in full

under what circumstances can we not bear government funds and surcharges

various government funds and surcharges have different collection areas, collection objects, collection standards, reduction and exemption conditions, and these Provisions are often adjusted according to the actual situation

at present, the spontaneous self consumption of distributed PV does not need to bear government funds and surcharges, and the internal power generation of micro electricity that is not exchanged externally does not need to bear government funds and surcharges

what are the recent changes in government funds and surcharges

since the current round of power reform, especially in the recent period, the overall level of government funds and additional funds has decreased. The more important adjustments are:

1 From January 1st, 2016, the collection standard of renewable energy development fund for all sales of electricity outside the living and agricultural production of residents in all provinces and regions (excluding Xinjiang and Tibet) will be increased from 1.5 points per kilowatt hour to 1.9 points per kilowatt hour (notice of the Ministry of Finance on raising the collection standard of renewable energy development fund and other related issues (CS [2016] No. 4))

2. Since February 1st, 2016, the post resettlement support fund for large and medium-sized reservoirs, the inter provincial (District, city) large and medium-sized reservoir area fund, and the Three Gorges Reservoir Area fund have been merged into the central reservoir resettlement support fund (i.e., the post resettlement support fund for large and medium-sized reservoirs). Merge the provincial large and medium-sized reservoir area fund and the small reservoir resettlement assistance fund into the late stage support fund for local reservoir resettlement (notice of the Ministry of Finance on issues related to the cancellation, suspension and integration of some government fund projects (CS [2016] No. 11))

3. From April 1st, 2017, the urban public utility surcharge will be cancelled (the notice of the Ministry of Finance on canceling and adjusting relevant policies of some government funds (CS [2017] No. 18))

4. From July 1, 2017, the collection standard of national major water conservancy project construction fund and large and medium-sized reservoir resettlement late support fund will be reduced by 25% (notice on reducing the collection standard of national major water conservancy project construction fund and large and medium-sized reservoir resettlement late Support Fund (CS [2017] No. 51) issued by the Ministry of finance. Jixi, Hegang, Shuangyashan and Qitaihe, four coal cities in Heilongjiang Province, are facing great transformation pressure

5. From July 1, 2018, the collection standard of national major water conservancy project construction funds will be reduced by another 25% (notice on reducing the collection standard of some government funds (CS [2018] No. 39) issued by the Ministry of Finance)

6. During the 13th Five Year Plan period, all provinces and regions can decide on their own to exempt, suspend or reduce the late support fund for local reservoir resettlement (notice of the Ministry of Finance on canceling and adjusting some policies related to government funds (CS [2017] No. 18))

how should the distribution business deal with government funds and surcharges

government funds and surcharges are levied on the electricity consumption of power users. It is inappropriate to directly levy government funds and surcharges on the electricity measured at the distribution gate, because:

1 There are losses in the distribution, so the sum of the power measured by the distribution gate and the power consumption of all users in the distribution is not equal

2. There are distributed generation facilities in some power distribution, and the electricity directly measured by the distribution gate will cause government funds and additional tax evasion

3. The types of power consumption in distribution are often not single, and the government funds and additional standards undertaken by different types of power consumption are different

suggestions on the handling of government funds and additional ways of power distribution (including local power and incremental power distribution) are as follows:

1 For incremental power distribution with comprehensive settlement method, the settlement price for provincial power should not include government funds and surcharges; For distribution settled by wholesale electricity price (or negotiated electricity price), the settlement price of provincial electricity should not include government funds and surcharges

2. Power distribution enterprises collect government funds and surcharges from all users in the distribution according to their electricity consumption and electricity consumption categories, which are collected and handed over to provincial power enterprises