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It will take a long time for the competitive retail electricity market to come into operation smoothly. Photo: Nguyen Thanh

Customers can choose a unit to sell electricity

In early June, the Prime Minister sent a document to the Ministry of Industry and Trade and State Capital Management Committee at enterprises on the policy of building and developing a competitive electricity retail market in Vietnam.

This document clearly states the Prime Minister agrees on the policy of developing a competitive electricity retail market and studying and adjusting regulations on electricity retail prices to suit the development of the electricity market. This is one of the latest directives of the Prime Minister regarding the competitive electricity retail market, as a premise for pilot application in 2021.

Previously, in the statement of approving the policy of building and developing the competitive electricity retail market in Vietnam and sent to the Prime Minister, the Ministry of Industry and Trade built step by step for the electricity retail market.

Phase 1 (2020 - 2021): The stage of implementing necessary preparations for the operation of the competitive electricity retail market in the second phase (2022 - 2023).

Phase 2 (2022 - 2023): Large electricity users participate in buying electricity from the spot market. Specifically, large electricity users can buy electricity on the spot electricity market, with priority given to piloting direct bilateral contracts between large customers and renewable energy sources (such as wind power and solar power).

Electricity users who have not participated in the electricity retail market: Continue to buy electricity from power corporations according to the retail price tariff set by the competent authority.

Phase 3 (2024 - 2025): Large electricity consumers choose an electricity retailer. For customers participating in the electricity market, to expand the group of large electricity users eligible to participate in buying electricity from the on the spot electricity market; allowing a number of large electricity users in some areas to choose and change electricity retailers.

The remaining electricity customers: Continue to buy electricity from power Corporations according to the retail price tariff set by the competent authority.

Phase 4 (after 2025): Developing and expanding the electricity retail market. For groups of customers participating in the electricity market, to expand large customers to participate in buying electricity onthe on the spot electricity market; expand the scope of the electricity retail market, allowing electricity users nationwide to choose and change electricity retail units (according to a roadmap suitable to the scale of electricity consumption of customers).

Customers who do not participate in the market: Buy electricity from the default electricity retailers (power corporations) according to the tariff set by the competent authority.

After 2025, people who want to participate in the electricity retail market can choose a power retailer.

Extensive reform of retail price mechanism

The Ministry of Industry and Trade stated that according to current legal regulations, the retail price of electricity is regulated by the State. According to the provisions of the law amending and supplementing the Electricity Law, the average retail price of electricity, the mechanism of price adjustment and structure of the electricity retail price schedule shall be appropriately regulated by the Prime Minister in accordance with the development level of the electricity market.

According to the provisions of Decision 28/2014/QD-TTg regulating the structure of the electricity retail tariff, the electricity retail tariff is uniformly applied nationwide.

When implementing acompetitive retail electricity market, for customers participating in the retail market, it is necessary to amend Decision No. 28/2014/QD-TTg so the retail price of electricity will be due to the electricity retailer and agreement between electricity user customers under contracts. Therefore, the electricity retail price is determined based on unified negotiation between the two electricity buyers and sellers.

For customers who do not choose to participate in the electricity retail market, they will continue to follow the retail price tariff set by the State.

The electricity retail market will be expanded step by step. In the first stage, a part of electricity users directly participate in the market (buying electricity at competitive market prices, not applying the price subsidy mechanisms); the rest of customers buy electricity at the tariff set by the State.

Improving the electricity retailing price list: Who benefits, who suffers?

When eligible, it will expand the scope so that 100% of customers can participate in the electricity retail market (then the electricity price will be completely market-based, without subsidising the electricity price and support mechanisms and policies. State subsidies to poor and low-income households should be clearly separated, independent from the retail electricity price).