Some generating power units become stranded during the restructuring of electricity industry, giving rise to the need for scientific stranded-cost subsidy mechanism that can facilitate equitable competition among various generators. In order to mitigate the stranded costs problem of the coal-fired power plants caused by the transition from the regulated to liberalized market in Yunnan, this paper presents the design of the stranded-cost subsidy to thermal power plants in Yunnan. Based on the studies related to stranded costs in the literature, the definition and category of stranded costs are proposed, then the necessity of the stranded cost subsidy of Yunnan thermal power plants is analyzed, the accounting and recovery of the stranded costs are teased out. In the end, the framework design of the stranded-cost subsidy mechanism for Yunnan thermal power plants is proposed.