Published by ChinaMNC · Nanyue

Puyang Completes Water & Electricity Direct-Billing Pilot: What Foreign Founders Need to Know

Puyang has completed a pilot program converting indirect water and electricity billing to direct billing for residents, a reform that reduces intermediary fees and improves transparency. Foreign founders operating in China should understand how such utility billing reforms can affect their commercial properties and residential leases.

Puyang's Utility Billing Reform: A Practical Guide for Foreign Founders

Foreign founders establishing or operating a company in China often encounter utility billing arrangements that involve intermediaries—such as property management companies or landlords—who add surcharges or fees. A recent reform in Puyang City, Henan Province, addresses this issue for residents by converting indirect billing (转供) to direct billing (直供) for water, electricity, gas, and heating. While the pilot focuses on residential communities, the underlying policy direction and operational lessons are relevant to foreign-invested enterprises (FIEs) that lease commercial or residential space.

What Changed in Puyang

According to the Puyang municipal government, the city included a special campaign to rectify metering and charging for residential water, electricity, gas, and heating as a key livelihood project in its 2026 government work report. The campaign aimed to tackle opaque charging and irregular metering. As of October 27, 2026, basic construction had been completed in 11 pilot communities designated for conversion from indirect to direct electricity supply, pending further inspection. In the urban area, 11,842 households now receive direct water and electricity supply—10,563 for electricity and 1,279 for water—achieving 118.4% of the annual target. The verification rate and on-time replacement rate for the four types of residential meters have remained at 100%.

Direct supply means that residents pay utilities directly to the service providers rather than through property management. Residents in converted communities reported greater convenience, such as paying electricity bills via mobile phones instead of visiting the property office. One resident of Lvcheng Garden, a community with 4,244 households and a key conversion target, expressed satisfaction with the handover. A property management representative noted that the property company cooperated fully in pipeline inspections, household verification, document transfer, and on-site rectification, and will continue to assist with daily services and coordination with water and electricity departments.

How the Conversion Was Implemented

The city adopted a differentiated approach. For communities with sound infrastructure and clear property rights, conversion was accelerated, and water and electricity providers directly took over operation, maintenance, and billing. For communities requiring longer construction periods, dedicated personnel and task forces were assigned to oversee progress and ensure quality. Multiple departments—including market regulation, housing and urban-rural development, development and reform, urban management, and the water and electricity providers—formed working groups that conducted on-site surveys and tailored renovation plans to overcome last-mile obstacles.

The market regulation bureau's party secretary and director, Yue Chunqing, stated that the rectification task had been completed on schedule. He emphasized that the end of the campaign is not the end of oversight; long-term supervision will be implemented to standardize industry charging and metering practices and protect consumers' interests.

Implications for Foreign Founders

Although the Puyang initiative targets residential utilities, foreign founders should consider the following practical points when setting up or running a business in China:

• Lease agreements and utility billing: If your company leases office or residential space, review how utilities are billed. In some properties, landlords or property managers may act as intermediaries, potentially adding markups. The Puyang reform signals a policy trend toward direct billing and transparent metering, which could eventually extend to commercial properties. When negotiating leases, clarify whether utilities are billed at cost or include service fees.
• Property management cooperation: As seen in Puyang, property management companies play a key role in coordinating infrastructure upgrades. For FIEs, maintaining good communication with property management can facilitate necessary repairs or upgrades and ensure smooth utility services.
• Regulatory compliance: The campaign involved multiple government departments and emphasized standardized metering and charging. Foreign founders should ensure their operations comply with local utility regulations and be aware of any local campaigns aimed at reducing unfair fees. This is particularly relevant for businesses in sectors like manufacturing or food service, where utility costs can be significant.
• Long-term supervision: The Puyang government plans to maintain long-term oversight of utility charging. Foreign founders should keep abreast of local policy changes that may affect utility costs or billing practices, as these can impact operating expenses.

Key Takeaways

The Puyang utility billing reform demonstrates a local government effort to improve transparency and reduce intermediary costs for residents. While the direct impact on foreign founders may be indirect, it reflects a broader regulatory environment that values fair charging and consumer protection. Foreign founders should:

• Understand the utility billing structure in their lease agreements.
• Maintain open communication with property management and local utility providers.
• Monitor local policy developments that could affect utility costs.
• Ensure compliance with metering and charging regulations.

By staying informed, foreign founders can better navigate China's evolving utility landscape and avoid unexpected costs.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.