Public interests regulating theory holds that the application of price regulation to electricity keeps the level of output and price in monopoly and conspiracy fields with that in competition field, therefore meets customers’ and producers’ requirement of maximizing surplus84. However, the report released by electric power enterprise shows that their profit increased other than deduced in the latter six months of 2005. It also shows above-scope enterprises achieved 103.8 billion Yuan, increasing by 24.41% . And this contradicts with 12.7 billion yuan deficit mentioned in the 2005 performance analysis and 2006 trend forecast of electric power industry, which plays as the basis of the 2nd plan of price linkage between coal and electricity.

Corresponding with public interests regulating theory, regulator capture theory, developed by George Stigler, holds that it is industry that wins over regulation, whose design and reinforcement serve for the interest of regulated industry. Enterprises tend to regulation for a higher profit when they recognise that the reinforcement of regulating power bring greater benefit to them. And regulator will be controlled by industry institutions; regulated industry does not necessarily have higher efficiency and lower price than the one without regulation. Government in nature is an economic man, and might be driven by realising his maximum interest, becoming the invisible prolocutor of regulated industry, and this is called regulator capture. This consequentially harms the distribution of social resources and the enhancement of social welfare. Using this theory may explain the plan of price linkage between coal and electricity in a more persuasive way.

As a conclusion, price linage between coal and electricity does not solve the problem of coal and electricity market, but temporarily evades the conflict. It can only be used as a transitional measure, for it falls to meet the demand of deepening the reform of coal and electricity market and enhancing social welfare.