People can choose electricity price like phone package, electricity bill will be cheaper

Two-component electricity price list fully reflects investment and operating costs

The Ministry of Industry and Trade has just sent a document to Vietnam Electricity Group (EVN) requesting the urgent development of a two-component electricity price mechanism, including capacity price and electricity price.

Analyzing the two-component electricity price, Mr. Nguyen Tien Thoa - Chairman of the Vietnam Valuation Association - said that many countries in the world have applied it, mainly for production and business customers, and some places have applied it for household electricity. The two-component electricity price includes electricity price according to capacity and electricity.

Meanwhile, Vietnam is applying a single-component electricity tariff, which is an electricity tariff calculated based on electricity output. The single-component electricity tariff based on electricity output mainly covers variable costs of raw materials. The two-component electricity tariff includes additional fixed costs such as asset depreciation, repair costs, salary costs, etc.

According to Mr. Thoa, the single-component electricity price list does not fully reflect the impact on electricity production. But the two-component electricity price list is the opposite when it fully reflects the investment costs and operating costs, on the basis of which electricity consumers pay to ensure that investment.

Along with that, it also has the effect of sending signals so that electricity users know how they use electricity to adjust their electricity usage behavior effectively.

"I know that the Ministry of Industry and Trade has assigned EVN to study the two-component electricity price list. I also had the opportunity to study in Thailand and China. When electricity prices are adjusted, customers hardly complain because the fixed costs remain the same and are transparent.

Currently, we are conducting a pilot study to evaluate its impact and demonstrate the difference between the two options. In particular, consumers will have the opportunity to evaluate and compare the two options in terms of price difference when using electricity. I think we need such a pilot period to evaluate, summarize and widely replicate if it is really effective," said Mr. Thoa.

The Ministry of Industry and Trade requires EVN to develop a two-component electricity price mechanism (Photo: EVN). — The Ministry of Industry and Trade requires EVN to develop a two-component electricity price mechanism. Photo: EVN

2-component electricity price like telephone bill

Mr. Nguyen Minh Duc - Legal Department - Vietnam Federation of Commerce and Industry (VCCI) - said that the two-component electricity price is similar to the fixed telephone rate, which is a fixed amount called the monthly subscription fee, even if no calls are made, called the capacity price. The second part is calculated based on the amount of electricity consumed, called the electricity price.

According to Mr. Duc, the two-component electricity price mechanism accurately reflects the costs incurred to serve each customer, which are the costs of power lines, transformer stations and electricity costs.

For example, two customers using electricity are a restaurant and a factory. The factory operates 24/7, and its electricity consumption is stable. The restaurant only uses a lot of electricity during lunch and dinner. If the electricity output of both sides is the same, the restaurant's maximum capacity is larger, so the power line and transformer station must be prepared with a larger capacity, which costs more.

Thus, the impact of the two-component electricity price will reduce cross-subsidy among customers. Second, it will avoid customers registering for large capacity but not using it.

For example, there are factories that register for large capacity, requesting the power company to prepare power lines and transformer stations, but the project is behind schedule and does not consume electricity for many years. The cost of power lines and transformer stations during these years is wasted. This cost is then passed on to other customers.

Talking to Lao Dong about this proposal, Mr. Tran Viet Hoa - Director of the Electricity Regulatory Authority (Ministry of Industry and Trade) - said: International experience shows that most countries in the region and around the world apply two-component electricity prices. Applying two-component electricity prices will send the right signal to both electricity producers and consumers to improve economic efficiency from the allocation and reasonable use of resources.

Applying the additional power price component (VND/kWh or VND/kVA) will encourage customers to use electricity efficiently, contributing to improving the electricity load factor and saving electricity bills.

Source