CHINA Law and Practice Contributed by: Yan Gao, Yilin Wang and Zhuohui Li, Zhong Lun Law Firm
for Pricing Cross-Provincial Special Project Transmis- sion Tariffs, adopting a life cycle methodology based on an assumed operating period of 35 years. A tem- porary transmission price applies upon commission- ing, subject to periodic recalibration and final settle- ment over the life of the project. Capital returns are subject to an NDRC-prescribed cap on the internal rate of return. Regulatory Cycle All three categories of transmission tariffs are subject to review and re-approval by the NDRC on a three- year regulatory cycle. The fourth regulatory period (2026 to 2028) is currently under way. 4.7 Open-Access and Non-Discriminatory Transmission Open-Access Obligation Under the Energy Law, operators of energy transmis- sion network facilities, including grid enterprises, are required to open their networks and provide energy transmission services fairly and without discrimina- tion to qualifying entities. This obligation is further implemented in the electricity sector by the Measures for the Supervision of Grid Fair Open Access, which establishes detailed requirements governing connec- tion procedures, processing timelines, information disclosure obligations, and the terms on which grid enterprises must accept connection requests from power sources, local independent grids, incremental distribution networks and microgrids. The Guaranteed Purchase Measures additionally require grid enterpris- es to build or upgrade grid connection infrastructure in accordance with applicable plans and to provide standardised connection services to renewable ener- gy generators. Regulation and Enforcement The NEA and its regional offices are the primary regu- latory authority responsible for supervising compli- ance with open access obligations. In March 2025, the NEA launched a dedicated special supervision pro- gramme on grid fair open access targeting 19 prov- inces, focusing on connection project investment and construction, processing timeline compliance, grid interconnection and information disclosure. In Decem- ber 2025, the NEA published a notification identifying seven categories of typical violations observed across
multiple provinces, including the unlawful imposition of fees on generation enterprises, the transfer of con- nection costs to generators, delays in the buy-back of self-built connection works, and the use of technical or procedural barriers to obstruct connection applica- tions. Penalties Under the Energy Law, grid enterprises that violate the fair and non-discriminatory access obligation may be ordered to rectify the violation; where they refuse to do so, the regulatory authority may impose a fine of up to twice the economic losses suffered by the affected party, and in serious cases the responsible manage- ment personnel may be subject to disciplinary sanc- tions. Under the Guaranteed Purchase Measures, grid enterprises that fail to fulfil their connection and pur- chase obligations and thereby cause economic losses to renewable energy generation enterprises, are liable to compensate those losses and may additionally be fined up to an amount equal to the economic losses caused. 5. Distribution 5.1 Constructing and Operating Electricity Distribution Facilities The construction and operation of electricity distri- bution facilities in China is governed by substantially the same legislative framework as the transmission infrastructure. The Electricity Law, the Energy Law, the Regulations on Electric Power Supervision, the Regu- lations on the Protection of Power Facilities and their Implementation Rules all apply equally to distribution facilities. At the regulatory level, the Power Supply and Use Regulations (State Council, effective 1 September 1996, most recently amended in 2019) and the Power Supply Business Rules govern the operational obliga- tions of supply enterprises and the terms on which electricity is supplied to end-users. Historically, distribution networks were constructed and operated exclusively by the three major state- owned grid enterprises. Since 2016, the incremental distribution network reform has opened distribution- level investment and operation to non grid-enterprise participants including private and foreign-invested
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