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The political failure of China's first independent regulator in a strategic industry -the State Electricity Regulatory Commission (SERC), 2002-2013 -provides a natural experiment to uncover fundamental challenges to a gradualist approach to electricity market formation. Taking a political institutional approach, we show that while it was largely predictable that the breakup of the monopolistic power industry in 2002 created bureaucratic and corporate interests that would undercut the institutional role of SERC, subsequent difficulties in reforming electricity pricing, dispatch system, and integrating renewable energy sources strongly suggests that a central regulatory body would be necessary to lead a decisive transition to a market-based electricity market. AbstractThe political failure of China's first independent regulator in a strategic industry -the State Electricity Regulatory Commission (SERC), 2002-2013 -provides a natural experiment to uncover fundamental challenges to a gradualist approach to electricity market formation. Taking a political institutional approach, we show that while it was largely predictable that the breakup of the monopolistic power industry in 2002 created bureaucratic and corporate interests that would undercut the institutional role of SERC, subsequent difficulties in reforming electricity pricing, dispatch system, and integrating renewable energy sources strongly suggests that a central regulatory body would be necessary to lead a decisive transition to a market-based electricity market.

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