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EVN suggests adjusting electricity price when inflation over 5%
Under the plan suggested by the Electricity of Vietnam (EVN), the price of electricity will be calculated based on factors that affect production costs. Moreover, the price of electricity for household consumption will be raised to abolish the unsuitable gap between the prices of electricity for household consumption and production.
Double price increase suggested
According to the proposal by EVN, the average electricity price will be VND1,017/kwh in 2009, VND1,088/kwh in 2010-2011 and VND1,146/kwh in 2012. As such, the suggested price increase is double that of the latest increase (16% vs. 6% on January 1, 2007).
The price of electricity for production is expected to increase by 15.5% on average. The price levels will be different for 1/ normal production 2/ irrigation in agriculture and 3/ industrial zones.
The plan also proposes a 16% price increase in electricity for administrative agencies.
There are two projects for retail electricity pricing for household consumption. In the first project, there would be six price levels like the currently applied scheme with the increase of 16% for every level. However, the 36% increase would be applied for the first level (the first 100 kwh of consumption).
In the second project, there would be seven price levels. The first level, the first 50kwh of consumption, would see the increase of 27%, while the second, the next 50kwn would see the increase of 63%. The other levels would see the price increase of 12% each compared to the current levels.
Automatic price adjustment scheme proposed
Under the scheme which has just been submitted by EVN to the Ministry of Industry and Trade, the electricity price adjustment will be implemented under the automatic adjustment scheme, not under the fixed itinerary.
EVN has proposed adjusting the electricity price based on factors that affect production costs, like fuel prices, the exchange rate and consumer price index. The electricity price is only adjusted if the inflation rate is over 5%.
EVN anticipates that consumers would be shocked if prices were automatically raised when input material prices increased. However, this would truly reflect electricity production costs and follow the principle that the sale price must recover the production cost.
A price adjustment would be made every six months: the electricity price would increase if input material prices increased and vice versa.
Electricity price for household consumption will be raised
Pham Manh Thang, Head of the National Load Dispatch Centre, said that the electricity price for household consumption will be raised as the current sale price is 30-40% lower than the production cost.
“Currently, the electricity prices for household consumption and production are nearly the same, while the production cost for production electricity is lower than for household consumption,” Thang said.
Minister of Industry and Trade Vu Huy Hoang in a recent talk with the press also mentioned the need to raise the electricity price for household consumption and to apply the single price scheme nationwide.
VNN
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