Abstract: To properly deal with the cross-subsidies in the dual-track electricity market is a practical issue that needs to be addressed in advancing electricity reform. Based on the characteristics of various user transaction modes in the electricity market after reform of electric power system, cross subsidy is regarded as exogenous and policy-based cost independent item. At the same time, according to the principle of cost externalization, an electricity price model is constructed in the paper with converged mechanism and clearly defined cost elements and cost attributes under different market transaction scenarios, and on this basis, the mechanism of "transparent collection and transparent subsidy" and the balance mechanism are designed for cross-subsidies. Case study shows that the current cross-subsidy treatment mechanism will lead to problems such as the imbalance of income and expenditure, the unequal responsibility of electricity allocation in different markets, and the aggravation of the cross-subsidy responsibility of industrial and commercial users. A set of mechanisms designed in this paper, such as the mechanism of transparent collection and transparent subsidy, the dynamic balance between supply and demand, and the subsidy regression, will help to correct the deviation of institutional arrangement and effectively solve the contradiction between supply and demand of cross-subsidy in the dual-track market.

Key words: electricity reform, electricity price model, cross-subsidies, transparent subsidy mechanisms, balance account