Energy regulation plays an important role in China’s economic development. Focusing on the electricity industry, four shortcomings of the country’s current energy regulation become apparent: first, overemphasis on energy supply and neglect of other aspects of the industry’s impacts; second, an unclear system of regulation for the energy sector; third, over-regulation of the energy market; and fourth, insufficient environmental regulation. These shortcomings could be remedied by improving the understanding of the impacts of the energy sector, reforming the administrative regulation system for the energy sector, deregulating the energy market, and strengthening related environmental regulations.