China has appointed key officials to the new State Electricity Regulatory Commission (SERC) in a sign that the long-awaited reform of the country's power industry is gathering steam. The State Council yesterday said it had appointed former Zhejiang governor Chai Songyue head of the proposed industry watchdog. Shao Bingren, Song Mi and Shi Yubo have been appointed as deputies to Mr Chai. Mr Shao is a vice-director at the State Council Office for Economic Restructuring, Ms Song is a director of basic industries under the State Development Planning Commission, and Mr Shi is director-general of the Electric Power Department of the State Economic and Trade Department. Analysts welcomed the appointments. Ivan Lee of HSBC Securities said: 'It's good news. It shows the reform is on the way.' The setting up of the SERC is a key element in the sweeping reform of the near-monopoly State Power, which owns about half of the country's 355 gigawatt installed capacity and the entire electricity transmission network. The reforms will break State Power's monopoly by transferring its power generation assets to five proposed national power firms. Alex Fan, head of China research at Daiwa Institute of Research, said: 'I expect to see details of State Power's plan to allocate its power generation assets to the five to-be-set-up national firms.' However, Mr Lee believed the planned asset allocation was unlikely to be unveiled soon as State Power appeared to be improving its asset quality ahead of any disposals. He said the return on equity of State Power, which included power generation and distribution, was only 2.8 per cent. This was well below the average 10 per cent return on equity of H shares Huaneng Power International and Beijing Datang Power Generation.