Proposal for new tiered electricity price, highest at over 3,600 VND/kWh

Household electricity price list: Reduced from 6 levels to 5 levels

The Ministry of Industry and Trade has just sent the Ministry of Justice for appraisal of the draft Decision on the new retail electricity price structure, replacing Decision 28 of 2014.

The average electricity price is VND 2,006.79/kWh (excluding value added tax) from November 9, 2023. Photo: Hoang Giam

The Ministry of Industry and Trade proposed to improve the structure of the retail electricity price list for households, shortening it from 6 levels to 5 levels as proposed by EVN and the consulting unit, but with changes in the proportion structure compared to the average retail electricity price.

Specifically:

+ Level 1: for the first 100 kWh; electricity price is 1,806.11 VND/kWh

+ Level 2: for kWh from 101 - 200; electricity price is 2,167.33 VND/kWh

+ Level 3: for kWh from 201 - 400; electricity price is 2,729.23 VND/kWh

+ Level 4: for kWh from 401 - 700; electricity price is 3,250.99 VND/kWh

+ Level 5: for kWh from 701 and up; electricity price is 3,612.22 VND/kWh

Based on the design of the levels, the electricity price for each level is redesigned to follow the above principles as well as ensure minimal impact on electricity users.

Specifically: Maintain the current electricity price for the first level from 0-100 kWh to ensure stable electricity prices for poor households and social policy households with low electricity usage (accounting for 33.48% of households). The difference in reduced electricity revenue is compensated for by households using electricity from 401-700 kWh and over 700kWh.

Maintain current electricity prices for levels from 101-200 kWh and 201-300 kWh.

"Electricity prices for levels from 401-700 kWh and from 701 kWh and above are designed to offset revenue for lower levels," the Ministry of Industry and Trade stated.

electricity price.jpg — The new electricity price list is expected to be applied compared to the current electricity price list.

According to the Ministry of Industry and Trade, the advantage of this plan is that it is simple and easy for people to understand because it reduces the current electricity price structure from 6 levels to 5 levels.

Combining tiers together to increase the gap in electricity consumption between tiers and widen the gap in consumption of higher tiers, to reflect the actual situation of electricity consumption and encourage more economical and efficient use of electricity. At the same time, it partly limits the increase in electricity bills during the changing seasons.

The Ministry of Industry and Trade believes that the price increase between the levels is reasonable, the difference between the first and last levels is twice, in line with the general trend of countries around the world to encourage the use of electricity economically and effectively through increasing the price difference between the first and last levels.

Specifically: Southern California, USA is 2.2 times, South Korea is 3 times, Laos is 2.88 times; Thailand is 1.65 times.

Households with electricity usage of 710 kWh or less (accounting for about 98% of households) will have their electricity bills reduced.

The disadvantage of this option is that households with high electricity usage of 711 kWh/month or more (accounting for about 2% of households) have to pay more for electricity.

Electricity price for tourist accommodation is equal to electricity production price.

According to the report and calculation of Vietnam Electricity Group and consultants in the Project to improve the structure of retail electricity prices, the current electricity selling price for production does not accurately and fully reflect the cost of electricity production and business (lower than the allocated cost).

The Ministry of Industry and Trade believes that it is possible to immediately apply the electricity price plan for tourist accommodation facilities equal to the electricity price for production to ensure a step-by-step roadmap to correctly and fully calculate costs for production customers.

Accordingly, the revenue shortfall due to the addition of the "tourist accommodation" customer group can be considered to be compensated from the off-peak electricity price of the production customer group from 4% to 8% compared to the average retail electricity price because currently the off-peak price of this customer group is much lower than the average retail electricity price (from 52% to 56%).

However, the disadvantage of this option is that manufacturing enterprises will be affected by price increases from 1.27% to 3.85%, causing adverse impacts on manufacturing industries.

Expected new household electricity price list: 5 levels, highest 3,457 VND/kWh The new retail electricity price list is expected to be shortened to 5 levels. Level 1 has the lowest price of about 1,728 VND/kWh and the highest (level 5) is 3,457 VND/kWh.

Source