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Transmission and distribution networkpsilas natural monopoly characteristic decides it must receive regulation. Based on the analysis of price-cap regulation model, combining with the situation and status of power network in China, this paper put forward a reformative price regulation model, which takes network expansion and service quality into account at the same time. To carry out the transition of regulation method from traditional mode to incentive regulation mode, we studied the setup of initial price in price regulation model. In the end, the problem of quality factor computation was discussed.