Single power price of nearly 3,000 VND / kWh "forces" users to choose ladder tariff?

	Common electricity price is nearly VND 3,000/kWh, who benefits and who suffers?
	Solar Power Trading: Deadlock due to lack of clear regulations
	Anxiety over wind power when the Government has not finalized to extend the FIT price

Ha Dang Son, Director of Centre for Energy Research and Green Growth

The Ministry of Industry and Trade is consulting the draft decision of the Prime Minister on the structure of the electricity retail tariff to amend Decision 28/2014 / QD-TTg on the structure of the electricity retail tariff. Notably, the five-tier electricity retail price structure and the single price mechanism will be parallel to the single price electricity of nearly 3,000 VND / kWh. Whatdo you think about this draft?

I am not surprised to see the single price model for daily life is much higher than the average retail price. The one-price electricity tariff needs to be calculated on the basis of scenarios of alternative consumer groups and all other costs.

That is why the Ministry of Industry and Trade has proposed a rather high price, about 10-15% higher than the previous estimated value. As amatter of fact, people of low income will not benefit much from this one-price mechanism. In contrast, thosechoosing this option are mainly high-income and the more power people use, the more benefits they will get. In detail, people using more than700 kWh / month will benefitif they choose the one-price electricity price. However, it will be more costly for users under 700kwh to choose this option so they will tend to choose the same ladder price.

The electricity price of one price given by the Ministry of Industry and Trade in both scenarios is 2,703 VND / kWh and 2,889 VND / kWh, respectively. There are many that saythat such a one-price electricity price given by the Ministry of Industry and Trade is "forcing" users to choose the ladder power plan. Could you share your opinion?

- In the proposed ladder, the price level 4 is only equivalent to the highest level (level 6) of the old tariff. Except level 5 for kWh 701 or more will be high priced for the purpose of restraining consumption of much electricity. The single price tariff is part ofthe range between level 4 and level 5 of the traditional electricity tariff. Therefore, this calculation cannot be considered "forcing" users to choose the ladder tariff. Instead, households that consume a lot of electricity for daily life still have the right to choose the correctoption for their family

Clearly, the policy is aimed at saving electricity. However, why does it offer such a high price per unit under the single price schemes? The reason is that it is very difficult to estimate the number of households registering for this 1 price level and whether the entire group of households consuming more than700 kWh/month will choose the oneprice option or not. Currently, the segment of customers using 400 kWh month or more only accounts for about 11% of total household electricity consumption. If the 1 grade price is applied, electricity consumption in this segment will go up. Moreover, this also encourages customers who use less to consume more electricity. As a result, the main target of decreasing electricity demandto enhance the energy consumption efficiency via price control will not be achieved.

The above price offering could be considered the proactive research of the Ministry of Industry and Trade to evaluate social response and the interest level of involved stakeholders. On the basis of the feedback, the department may make adjustments to these tariff options.

Single-price electricity is an unprecedented option in previous draft reforms of electricity retail tariff structure of the Ministry of Industry and Trade. Is the parallel application of aladder tariff and the one-price electricity only a solution to satisfy the desires of a part of the population?

- What I expect is not the single price electricity, butto promulgate a parallel mechanism between ladder electricity and the installation of a 3-price electricity meter to charge electricity three times a day corresponding to peak hours, off-peak hours and average hours, which will be much more effective than managing loads during peak hours. Despite the orientation and direction of installing three-price meters for households, for many reasons, it has not yet been implemented. Hopefully, it will be implemented soon.