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The State Grid Corp, the nation's largest power transmission and distribution company, has established a regional power grid subsidiary in Northeast China.

The launch into an integrated regional power market is a landmark step for China, and a step towards boosting competition and facilitating a power exchange in the area.

The regional grid company was formed by consolidating local grid firms in Northeast China covering Heilongjiang, Jilin and Liaoning provinces, and the Chifeng and Tongliao areas in the Inner Mongolia Autonomous Region, the company said in a written statement.

Registered funding for the regional grid company is 27.2 billion yuan (US$3.3 billion).

Northeast China is one of the few areas in the nation with an electricity oversupply.

Although provincial grids have been connected, the area has seen few electricity exchanges. Local grid companies have preferred producing electricity from their own generating sources even though the prices for electricity are sometimes cheaper in neighboring areas.

The government hopes a regional grid system will help build a trading centre that will require generating firms bid to sell their electricity at the lowest costs to consumers, and to improve efficiency.

The major task of the regional company is to "manage and operate the grid, ensure stable supplies, plan for the development of the regional grid network, cultivate the regional power market, manage the power trading centre and distribute electricity according to market rules," the statement said.

The company said it will also push through reforms to attract investors to the regional grid to optimize return to shareholders.

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