MoIT considers common retail power price

Workers of Vietnam Electricity check household power consumption on meters. (Photo: VNA)

He said last week that the ministry is studying a new calculation for power prices. Accordingly, households could choose one of two ways: a common price and the current tiered pricing mechanism. However, the current six tiers would be reduced to five as it ensures all households with power consumption of less than 700 kWh (98.2 percent of the total) would not be see increased power bills.

“Each calculation has its own advantages and disadvantages. It is the reason we should have an overall calculation. With the current tiered pricing mechanism, low-income earners with power consumption of less than 300 kWh have more benefits,” he added.

He said that if customers choose the common power price option, the revenue of the Electricity of Vietnam (EVN) would be reduced. However, no matter the price option, in terms of the total revenue on commercial electricity, the retail price obtained is equal to the average price to ensure the harmony of benefits.

Currently, many countries have applied the tiered pricing mechanism. Some, however, are applying a fixed retail price. For example, in Singapore, the power price for households is only 24.39 cents a kWh. However, this price is adjusted every three months to reflect changes in electricity costs.

In Germany, the electricity price is not regulated by the State but by each company. The price difference among power distribution companies is not large. In addition to the electricity bills, people have to pay an extra 100 EUR each year for electricity and other services. 

Similarly, in New Zealand there are about 20 power supply units. Electricity prices are not calculated according to the tiered pricing mechanism but agreement between customers and companies.

Electricity tariffs usually include price per kWh along with daily management fees and other costs.

The surge in power bills in the past two months has surprised customers. Of which, the calculation of the current six tiers in power prices has been one of reasons contributing to the surge.

The MoIT planned to collect opinions on the reduction from current six to five tiers in power pricing mechanism. However, it asked to postpone the revision to the end of this year due to COVID-19./.

VNA