Adjusting electricity prices ensures harmony of interests among parties participating in the electricity market.

On October 11, 2024, Vietnam Electricity Group (EVN) issued Decision No. 1046/QD-EVN on adjusting the average retail electricity price. Accordingly, from October 11, 2024, the average retail electricity price will be VND 2,103.1159/kWh (excluding value added tax). This adjustment is equivalent to an increase of 4.8% compared to the current average retail electricity price.

Quang Tri PC actively promotes electricity saving - Photo: TN

Inconvenience in electricity prices

According to EVN's report in recent years, input fuel prices for electricity production (including coal, oil, gas, foreign exchange rates...) have all increased due to fluctuations in the world situation and the impact of the El Nino phenomenon, causing the structure of electricity sources to fluctuate in an unfavorable direction, while cheap electricity sources such as hydropower have decreased. In addition, Vietnam's electricity demand has increased by approximately 10-11%, all of which have led to high electricity generation costs.

In this context, EVN and its member units have implemented a number of solutions to save, reduce and optimize costs, such as saving 10-15% of regular standard costs, reducing 20-50% of major repair costs; launching electricity saving campaigns at all agencies and affiliated units; however, due to the high cost structure, EVN's electricity production costs have increased.

Mr. Nguyen Tien Thoa, former Director of the Price Management Department ( Ministry of Finance ) said: "If the selling price does not cover the cost, it will cause many consequences. According to the published inter-sectoral inspection data, the cost of electricity is 2,088 VND/kWh and the average selling price is 1,953 VND/kWh.

That is, the cost of electricity is 6.92% higher than the average selling price of electricity. This is a situation of buying high and selling low, meaning that the input is according to the market but the output is not enough according to the costs that have been calculated correctly, sufficiently, reasonably and validly in the process of producing and trading electricity. This reality will cause many consequences for electricity production and trading, for electricity-using industries and for the whole economy.

Resolution No. 55-NQ/TW of the Politburo has requested the application of market prices for all types of energy, including electricity prices. The Government has issued regulations on the basis of how much the input changes within a period of 3 months, EVN is allowed to adjust the electricity price by a certain percentage.

The principle of electricity price management is to ensure that reasonable and valid production costs are compensated correctly and fully. If this can be done, there will be no loss for the electricity industry, no loss to subsidize the economy, and attracting investment to develop the power grid will also be more favorable.

However, in the long term, it is necessary to amend the electricity price policy mechanism in the Electricity Law with a long-term vision to handle the requirements for one of the core issues of the electricity industry, which is the inadequacy of electricity prices.

To do this, we must first reform electricity prices, then build institutions and basic foundations to transform and shift energy towards bringing more “clean, green” electricity sources into the electricity production structure. In particular, we must build a roadmap to reform the entire electricity sector with an orientation towards the Net Zero goal and sustainable development of Vietnam.

In short, the adjustment of electricity prices is based on political, legal and practical grounds. The adjustment of electricity prices is carried out in stages, this is also one of the goals to ensure long-term energy security is an urgent issue.

Ensuring harmony of interests

The State regulates electricity prices using market tools, which are taxes, fees, and funds to indirectly regulate the factors that form electricity prices in order to have an electricity price that ensures the harmony of interests of the parties participating in the electricity market.

In addition to calculating correctly and fully and the State regulating by indirect measures and market tools, electricity prices must also separate social security policies and support policies for the poor from electricity price policies and resolve them with direct support policies for poor households, then electricity prices will be more transparent and reasonable.

Because in any circumstance, it is necessary to ensure harmony between the interests of the State, people, businesses and other social security issues, especially supporting the poor in accessing and using electricity.

In the press release of EVN, it was affirmed: “Basically, this electricity price adjustment will ensure that poor households and policy families are not affected significantly. According to statistics, in 2023, the whole country will have 815,000 poor households and social policy households receiving electricity support according to the Government's policy.

Poor households and social policy households continue to receive support according to the provisions of Decision No. 28/2014/QD-TTg dated April 7, 2014 of the Prime Minister. In particular, poor households are supported with a monthly support level equivalent to the amount of electricity used by 30kWh/household/month; social policy households with the amount of electricity used not exceeding 50kWh/month are supported with a monthly support level equivalent to the amount of electricity used by 30kWh/household/month.

Therefore, this increase in electricity prices will directly affect electricity customers according to EVN's calculations as follows: For service business customers (about 547,000 customers), the average increase per customer is 247,000 VND/month.

For manufacturing customers (the whole country has about 1.921 million customers), after the price adjustment, each customer will pay an average of 499,000 VND more/month. For administrative and career customers (total 691,000 customers), after the price change, each customer will pay an average of 91,000 VND more/month.

In the context of many difficulties in our country and to ensure harmony between economic goals and social goals, the social security policy in electricity use for poor households and social policy households has been consistently applied for many years.

Poor households and social policy households are supported with the equivalent of 30 kWh of electricity per month from the state budget. Therefore, the joint efforts of the entire electricity sector not only ensure energy security but also meet the requirements of social security policies.

Tan Nguyen

Source: https://baoquangtri.vn/dieu-chinh-gia-dien-dam-bao-hai-hoa-loi-ich-giua-cac-ben-tham-gia-thi-truong-dien-189205.htm