Abstract: How to motivate power enterprises to improve productivity has always been the core issue of power industry reforms. Through empirical analysis, this paper has measured the annual TFP of hundreds of domestic thermal power enterprises. The results show that thermal power enterprises have enjoyed a significant boost of TFP since the separation of power generation and transmission in 2002. However, based on the regression analysis between sales price of electricity and the TFP of power generation enterprises, we find that the TFP is promoted when the sales price falls, but nothing happens to the TFP when the sales price increases. That is to say, there exists asymmetric incentives. This further suggests that changes in sales price are selectively transferred upstream, the regulation of sales price alone would not encourage the transmission and distribution enterprises to improve productivity. However, power generation enterprises are subject to increased risks of regulation transference.