The government's regulatory obligations to public utilities franchise

• Author: The government's regulatory obligations to public utilities franchise
• Pages: 335-359

FRONTIERS OF LAW IN CHINA

VOL. 14 SEPTEMBER 2019 NO. 3

DOI 10.3868/s050-008-019-0017-9

FOCUS

RETHINKING PUBLIC–PRIVATE PARTNERSHIPS

THE GOVERNMENT’S REGUL ATORY OBLIGATIONS TO PUBLIC

UTILITIES FRANCHISE

GAO Junjie∗

Abstract Under the public utilities franchise system, the executive branch may

transfer the task of providing public utilities services for the common good to a private

party. It should undertake to regulate and prevent the private party from pursuing its own

interests to the detriment of public interest while discharging its duty under the public

utilities franchise. Since any public interest must be enjoyed by all individuals, we can

say that the obligations owed under administrative regulations aim at the ultimate goal of

increasing individual welfare. In the public utilities franchise system, regulations of this

kind can be divided into six different categories: maintaining and promoting necessary

market competition, ensuring the continuity of public utilities services, ensuring

non-discriminatory provision of public utilities services, ensuring the quality of public

utilities services, ensuring reasonable charges for public utilities services, and ensuring

the conservation of energy and protection of the environment while providing public

utilities services. The absence of governmental regulation of the provision of public

utilities and of reforms in such services in China has harmed both public interest and the

rights and interests of consumers. Some of the problems caused include chaotic market

access for public utilities, no guarantee of the sustainability of public utilities, the failure

of the universality of public utilities, declining quality of public utilities, sharp rise in the

prices of public utilities, insufficient regulations on the conservation of energy and

environmental protection, and so on. In order to achieve the effective implementation of

the administrative regulations and obligations therein with respect to public utilities and

the maximization of public interest, the Chinese government should enhance its

consciousness of regulating public utilities, improve the legal system to regulate public

∗ (高俊杰) Ph.D. in Constitutional and Administrative Law, School of Law, Peking University, Beijing,

China; Assistant Professor, School of Law, Shenzhen University, Shenzhen 518060, China. Contact:

gaojunjie0816@126.com

This article is a phased achievement of the “Research on the Administrative Regulation to Franchise of

Public Utilities” project, supported by the National Social Science Fund for Young Scholars (Project No.

17CFX014). The author would like to express her gratitude to Professor Ingwer Ebsen for his valuable

suggestions regarding the revision of this article. The author also thanks graduate student LI Minshi for her

proofreading work. The author takes full responsibility for any mistakes and omissions in this article.

336 FRONTIERS OF LAW IN CHINA [Vol. 14: 335

utilities, perfect the regulatory system for public utilities, and establish a system of

liability to compensate for failures in regulation.

Keywords public utility, franchise, administrative regulation, public interest, public−

private partnerships, PPPs

INTRODUCTION .................................................................................................................... 337

I. THE EVOLUTION OF THE PUBLIC UTILITIES FRANCHISE SYSTEM IN CHINA............ 337

A. From 1978 to the Early 1990s: Public Utilities Reform in China Began to

Grow ................................................................................................................. 338

B. From the Early 1990s to the Early 21st Century: An Exploration of the Reforms

in the Public Utilities System in China .............................................................339

C. From the Beginning of the 21st Century to the Present: The Franchising System

of Public Utilities Has Been Gradually Established......................................... 342

II. OBLIGATIONS UNDER THE ADMINISTRATIVE REGULATIONS FOR PUBLIC UTILITIES

FRANCHISE............................................................................................................. 344

A. Maintaining and Promoting Necessary Market Competition............................ 345

B. Ensuring the Continuity of Public Utilities ....................................................... 345

C. Ensuring Non-Discriminatory Provision of Public Utility Services ................. 346

D. Ensuring the Quality of Public Utility Services................................................ 347

E. Ensuring Reasonable Charges for Public Utility Services................................ 347

F. Ensuring Energy Conservation and Environmental Protection in Public Utility

Services............................................................................................................. 348

III. THE STANDARDIZATION AND PRACTICE OF ADMINISTRATIVE REGULATIONS IN THE

FIELD OF PUBLIC UTILITIES IN CHINA .................................................................. 349

A. The Chaotic Market Access of Public Utilities..................................................349

B. Lack of Guarantee for the Sustainability of Public Utility Services..................350

C. The Universality of Public Utility Services Is Difficult to Achieve ................... 351

D. Declining Service Quality of Public Utilities....................................................352

E. Prices of Public Utility Services Rise Sharply ..................................................352

F. Insufficient Regulation on Energy Conservation and Environmental

Protection.......................................................................................................... 353

VI. SUGGESTIONS FOR THE GOVERNMENT’S EFFECTIVE IMPLEMENTATION OF ITS

REGULATORY OBLIGATIONS ON PUBLIC UTILITIES............................................... 354

A. Strengthening the Government’s Awareness of the Regulations on Public

Utilities ............................................................................................................. 354

B. Improving the Legal System in Regulating Public Utilities............................... 355

C. Improving the Regulatory System for Public Utilities.......................................356

D. Establishing the System of Compensation Liability for Regulation Failure .....358

CONCLUSION........................................................................................................................ 359