The Characteristics of Vertical Structure and Price Forming Mechanism of Power Coal

In recent years, coal-electricity conflicts is a big problem for related industries and government regulatory agencies, the basic reason of that is that an effective prices mechanism of coal has not yet been built. This paper analyzes the price setting and external shock transferring mechanism for four kinds of typical vertical structure, and the reasons for failure of price mechanisms in the coal-electricity industrial chain in China. This paper suggests that the coal-electricity industrial chain should be regulated as an integrated system, then builds an integrated regulation framework, discusses the benchmark price of coal, the relationship between access price and final price of electricity, and the impact of the vertical integration between coal and electricity industry on price mechanism of coal. Under the real situation in China, the benchmark price of coal should be determined based on access price and final price of electricity, and the government should set a price range for coal as regulation policy, which could be a feasible solution for solving the coal-electricity conflicts in the near future.