Under the background of China's ultra-high voltage power grid construction and west-to-east power transmission project, peak operation during valley-load period has become one of the power grid operation difficulties. In order to effectively solve the problem of peak operation in regional power grid, the partly deregulated market environment is introduced, which helps allocate peak operation resources among provincial grids in the region. A regional down-regulation market and its framework are designed based on regional grid. A power generation allocation model is proposed aiming at the stability of the load distributing process and the maximization of the profits of regional plants and a price-iterative hierarchical optimization scheme is explored. Meanwhile, different goal weight setting methods and power transmission ratio setting methods are analyzed. The model is implemented to the peak operation of regional plants in East China Power Grid. The numerical results show that the peak operation problem in partly deregulated environment is effectively solved, meeting the demands for peak loads of multiple provincial grids. This work is supported by National Natural Science Foundation of China (No. 51377103) and Science and Technology Project of State Grid Corporation of China (No. 520800150014).