With the power improvement entering the deep water area, power market design and rule-making have become key issues facing the leading departments of the power market reform. As a signal for regulating power supply and demand and a link to realize power trading, in-depth analysis and research on the formation mechanism of electricity price, the structure of electricity price and the level of electricity price are essential. The research on electricity price theory mainly includes electricity cost analysis and electricity price formation mechanism. The former is the basis for measuring whether electricity prices are reasonable, but electricity prices must ultimately be formed through market mechanisms. In an ideal electricity market, the clearing electricity price should be equal to the marginal production cost of electricity in the electricity system and the marginal utility of electricity for electricity users. Therefore, the electricity price formation mechanism is the key to the design of the electricity market transaction mechanism. Different from other commodities, electric energy commodities exist in the form of invisible and intangible energy, and have continuity in time and space; once the electric energy produced by different power sources is connected to the Internet, it is physically homogenized and cannot be distinguished. In addition, production, transmission, and consumption are all completed in the power system, making electrical energy commodities one of the most complex commodities in the world. The addition of market elements makes the power system more complicated. In general, the problems of the power market/power system can still be divided into three levels: the physical layer of the power system, the commodity transaction layer, and the financial transaction layer. The connotations of "electricity" in different levels are completely different. Due to the physical homogeneity of electric energy, the power grid is like a pool, and it is impossible to distinguish between producers and sellers. Therefore, the electric energy traded in the electricity market actually belongs to the commodity transaction layer, and the electricity market transactions are completely dependent on the adopted scheduling model. Take the day-ahead market as an example. Divide the entire trading period into a series of cycles (such as 1 day), and each cycle is divided into several periods (such as 1 hour), and then calculate the clearing price and clearing electricity according to the power balance model. For the intraday real-time market, the basic concept is the same except that the cycle is usually shortened to 5-15 minutes. Therefore, the electric energy commodity model of the electric spot market is: the area under the power curve of the trading cycle is divided into a number of "strips" according to the same length period, and then each is divided into a number of "segments" with unequal heights. On the power generation side, the power generators that have transacted in a period of time each take 1 "segment" (ie 1 commodity), and are cleared according to the uniform marginal price method. The load settlement price of each period of the same period is the same, which is the same period. The highest price of the transaction unit. The same is true on the load side. Under this pricing method, the prices of electric energy commodities produced by the same power plant at different times are different; at the same time, all electric energy commodities have the same price, and it is impossible to distinguish the different technical characteristics and cost components of base load, waist load and peak load units. The above two situations do not conform to the actual situation of power system operation. Especially in the context of large-scale access to renewable energy, countries around the world have encountered problems in the operation of electricity markets established based on this pricing mechanism, so they are improving market design. A feasible improvement plan is the mechanism of pricing based on load duration, that is, the price of the same load duration is considered the same, and when the load duration changes, the price of electric energy will change accordingly. The shorter the duration and the better the flexibility, the higher the quality and the higher the price of electric energy products. This pricing method is consistent with the distribution law of the production cost and use value of electric energy commodities in the actual power system. The in-depth peak shaving pricing method summarized in practice in my country has achieved good results. It has been first established in the Northeast Electric Power Auxiliary Service Market and promoted throughout the country. Over the past three years since the electricity reform, the author believes that the biggest difficulty in the design of the electricity market trading mechanism lies in how to obtain a relatively stable market price determined by supply and demand while ensuring the spontaneous market order. "Spontaneous market order" is based on the power of free competition and independent choice by market entities. Due to the complex behavioral strategies of market entities, a relatively stable market price that correctly reflects market supply and demand, production costs, and power efficiency is very important under the spontaneous market order. This is especially true when laws and regulations, credit systems, and regulatory systems are not yet complete. In fact, "restoring the attributes of electric power products" is based on "restoring the free competition and independent choice of market players", which is also the focus of "Circular 9". The most common trading methods in the electricity market include bilateral negotiation and centralized bidding, and there are also listed transactions in my country. Market transactions happen because they can improve social welfare, and how social welfare is distributed depends on the common wishes of both the supply and demand sides of the market. In bilateral negotiated transactions, the distribution plan of social welfare is privately agreed by the supply and demand parties; in the centralized bidding mechanism, how to distribute social welfare is the key and difficult point. The mid-to-long-term electricity “double-pick and double-pick†and multiple matchmaking transactions adopted by provinces such as Sichuan and Yunnan are both effective market price formation mechanisms that are independently determined by both the supply and demand sides. In the 2016 monthly centralized bidding of electricity in the Guangdong power market, a unique price and electricity fee refund and clearing mechanism was adopted. Inspired by this, this paper proposes a "double-sided equivalent PAB clearing mechanism" suitable for mid- to long-term centralized electricity bidding. As shown in the figure, the supplier's settlement price is the declared price multiplied by the supplier's settlement coefficient α, and the total supply curve extends upward by a certain proportion. The demand-side settlement price is the declared price multiplied by the demand-side settlement coefficient β, that is, the total demand curve shrinks by a certain proportion downward, and the social welfare generated by the transformation of this ratio is exactly equal to the social welfare generated by the declared price of supply and demand. Under this mechanism, only if the supply and demand parties are as close as possible to the marginal price and guarantee the transaction, can the profits be maximized. But the risk of not trading at this time is also the greatest, and the risk is directly proportional to the return. Under this bidding mechanism, the selection of α and β is a key issue, which determines the distribution of social welfare between supply and demand and should be determined by the regulatory agency. Since the quotation strategy of the main body of supply and demand is similar to the PAB clearing mechanism (that is, quoting at the predicted marginal price), it is called the "equivalent PAB clearing mechanism". Simulation studies have shown that this clearing mechanism can quickly stabilize market prices without the need for artificially setting the supply-demand ratio, and the average settlement price can better reflect the common wishes of both parties in the market. my country has a vast territory, with huge differences in factor levels and resource endowments across regions. If a unified power market with completely free competition is established in regions with significant differences, under the influence of market mechanisms, the result will be that the power resources owned by regions with underdeveloped economies and relatively low electricity prices will flow to more developed economies and relatively high electricity prices. In regions with low-developed regions, electricity prices will be raised, and the right to use resources may be lost; developed regions may take advantage of their higher electricity prices and stronger purchasing power to not only compete for resources with less-developed regions through market mechanisms, but also their own electricity prices The level also tends to decrease. Obviously, this result is contrary to fairness and regional coordinated development strategy. In addition, differences in power generation costs due to different types of power plants and investment and operating hours may also lead to unfair competition. The basic principle to deal with the differences in the market competitiveness of electricity purchase and sale entities in different regions is to introduce "moderate competition" on a fair basis. One feasible method is the price difference competition adopted by the monthly centralized bidding in the Guangdong power market: the price difference between the demand side's declaration and the current catalog price of electricity, and the supplier's declaration and the on-grid benchmark price difference. The benchmark price (currently the catalog electricity price and the on-grid benchmark electricity price) reflects fairness, and the price difference reflects efficiency. The problem that needs to be solved is the determination of the reasonable value of the benchmark price. Different types of power supply through the subsidy unified platform competition is the same as the price difference competition. In addition, the power market competition mechanism based on international trade concepts (or tariff principles) proposed by experts can also better deal with the issue of fair competition among power plants with different costs, which is worthy of further study. In the modern economic system, the market has an advantage in solving efficiency problems, and the government has an advantage in solving fairness problems, but both the market and the government have problems of failure. In my country's power industry, the main body of electricity purchase and sale has a large difference in the cost of electricity production and the ability to bear electricity prices. Power companies must pursue economic benefits as well as assume social responsibilities. Both "efficiency" and "fairness" are necessary for the reform of the electricity market. Stick to the principle. The "visible hand" of the government and the "invisible hand" of the market should be allowed to work in a division of labor, learn from each other's strengths, and give full play to the advantages of the public ownership of my country's power industry and the socialist market economic system. One of the key issues that the government must solve is the determination of the reasonable value of the aforementioned benchmark price or "tariff rate". The "Opinions on Innovation and Improvement of the Price Mechanism for Promoting Green Development" issued by the National Development and Reform Commission on June 21 this year proposes to improve the electricity price mechanism to promote energy conservation and environmental protection. Specific measures include improving the differentiated electricity price policy, improving the peak-to-valley electricity price formation mechanism, and improving some environmental protection. Industry power support policies, etc. From an economic perspective, differentiated electricity prices are a kind of price discrimination, which is in contradiction with fair competition in the electricity market, and further research solutions are needed. In addition, after the power spot market operates, the composition and meaning of the peak, trough, and flat period electricity prices will also change because the spot price in each period of the day is different. In addition, from the supply side, the newly commissioned large-capacity units have low energy consumption, but due to the loan repayment period, high financial expenses and high total costs; the old units have high energy consumption, but due to the long running time, the loan repayment has been basically completed. The financial expenses are low, and the total cost is low. According to the current energy prices, the variable cost advantage caused by the improvement of unit efficiency cannot be compared with the cost advantage caused by the difference in financial expenses. The result of complete free competition is that small units, old units defeat large units, new units, and the country's energy conservation and environmental protection. The requirements are contrary. This problem also needs to study a reasonable solution. Judging from the comprehensive index of the level of industrialization, my country generally entered the late stage of industrialization in 2015. However, compared with the requirements of building a modern and powerful socialist country, my country's industrialization still has various imbalances such as regional development, the industrialization speed of industrial institutions, and the carrying capacity of resources and the environment. The widespread application of electric energy is the main feature of the second industrial revolution. The huge differences in the level of industrialization in different regions of our country determine the degree of dependence of the local industrial structure on electricity. Therefore, the development of power technology and the level of electricity prices must adapt to the new industrialization in the new era. Claim. On the power generation side, to achieve higher efficiency of generator sets, adopt stricter environmental protection standards; optimize the energy structure of thermal power, increase the proportion of renewable energy power generation; actively develop natural gas power generation and distributed energy. On the power consumption side, the industrial structure is the main factor affecting the electricity consumption per unit output value. The energy consumption intensity of the secondary industry (electricity consumption per unit output value) is much greater than that of the primary and tertiary industries; High-energy-consuming industries have a weak ability to withstand electricity prices, while the tertiary industry, which consumes less electricity, has high added value and strong ability to withstand electricity prices. These issues must be fully considered in the electricity price formation mechanism. Wuxi Doton Power , http://www.dotonpower.com