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Illustrative photo: N.T

Electricity bills surge when using 300kWh,

The Ministry of Industry and Trade is collecting comments on the draft decision of the Prime Minister on the retail electricity tariff structure to amend Decision 28/2014/QD-TTg on the retail electricity tariff structure.

Notably, in the draft, in addition to the option to improve the retail electricity price, the current six tiers will be reduced to five. The Ministry of Industry and Trade provides a new option. The 5-tiered pricing mechanism and the common price will be applied in parallel (electricity customers can select the 5-tiered pricing mechanism or the common price).

Talking to the press on August 13, the Ministry of Industry and Trade specified these options.

Specifically, option 1: The current six tiers will be reduced to five, ensuring that the current average electricity price for householdsis maintained.

Accordingly, the current tier 1 and tier 2 will be merged into a new tier 1 (for 0-100 kWh), and the price of the new tier 1 will be kept as the current tier 1; the price for customers using from 101-200 kWh will be maintained; the tier for201-300 kWh will be merged with the tier for 301-400 kWh into a new tier; the tier for more than 401 kWh will be divided into two new tiers, including the tier for 401kWh to700 kWh and the tier for over 701 kWh.

Option 2:The current six tiers will be reduced to five, and there will be a common price.Customers are allowed to select the 5-tiered pricing mechanism or the common priceaccording to their electricity consumption level.

Regarding option 2, the Ministry of Industry and Trade develops option 2A and option 2B for consultation. Accordingly, the electricity tariffs in the first 4 tiers of the option 2A and option 2B is the same as the option 1.

The electricity tariffs in option 2A and 2B are proposed at 145% of the average price (equivalent to VND2,703/kWh) and 155% of the average price (equivalent to VND2,889/ kWh). Corresponding to each option, the electricity price at tier 5 will be recalculated to not change the average electricity price.

The Ministry of Industry and Trade assessed that the electricity bills of most customers using less than 600 kWh will decrease compared to the current price (from VND2,800 to VND12,800).

If customers use 300 kWh, the electricity bills will increase because the tier for 201-300 kWh and tier for 301-400 kWh are merged into a new tier. The additional payable amount when used at 300 kWh is VND7,100.

The electricity tariff of customers using electricity for householdpurposescalculated by the Ministry of Industry and Trade.

The table of electricity charges shows that in fact there is a difference compared to the ministry’s assessment when it has not analyzed in depth customers using less electricity but choosing the option of the common price.

Specifically, with the new tiered pricing mechanism, customers using 400kWh or less will have to pay less than the former tiered pricing mechanism. However, if these customers choose the common price, they will have to pay much more than choosing the tiered pricing mechanism.

With the new tiered pricing mechanism, customers using 700 kWh or more will have to pay higher than the former tiered pricing mechanism, however the increase is not significant. Meanwhile, if choosing the common price, these customers will have to pay morethan choosing the tiered pricing mechanism.

Thus, these customers must consider carefully when choosing the common power price.

Customers will benefit when using more than 800 kWh

For option 2A and 2B, the Ministry of Industry and Trade said that to ensure the stability of the average electricity price, and the maintenance of price in the first 4 tiers of option 1 and option 2 to not impact the electricity bills of customers using less than 700kWh/month.

If the common price is 145% of the average electricity price (in option 2A, the price is higher than in tier 3 and lower than in tier 4 and 5), the price at tier 5 will be 274% of the average electricity price.

If the common price is 155% of the average electricity price (in option 2A, the price is higher than in tier 3 and lower than in tier 4 and 5), the price at tier 5 will be 185% of the average electricity price.

If options 2A and 2B are applied, when customers choose the tariff according to option 1, they will limit the disadvantages of the tiered pricing mechanism, especially for customers consuming a high amount of electricity such as the surge of electricity billsin hot months, deviation in time of monthly meter readings.

Specifically, when the commom price is 145% of the average electricity price (option 2A), customers using electricity over 800 kWh choose the common price, their electricity bills will be lower than choose the tiered pricing mechanism.

When the common price is 155% of the average electricity price (option 2A); customers using electricity over 1,100 kWh choose the common price, their electricity bills will be lower than choosing the tiered pricing mechanism.