Brian Jeffrey
New Electricity Pricing in Vietnam
Effective October 11, the average retail electricity price has increased to VND2,103.1159 per kWh, rising from VND2,006.79 per kWh. This change represents a 4.8% hike, translating to an additional VND96.32 per kWh.
Impact on Various Consumer Groups
The price increase will affect different customer segments based on their electricity usage.
- Approximately 548,000 service-oriented clients, who currently spend around VND5.17 million monthly, will see an additional charge of VND247,000 each.
- For around 1.921 million households involved in production, averaging VND10.38 million per month, the increase will be VND499,000 monthly.
- About 691,000 non-business public entities, with an average monthly cost of VND1.93 million, will incur an extra VND91,000.
Household Usage Effects
The effect on households varies according to their monthly electricity consumption:
- Households consuming less than 50 kWh will see an increase of VND4,350.
- Those using 51-100 kWh will pay VND8,850 more.
- Households using 101-200 kWh, representing 34.31% of all households, will incur an additional VND19,250.
- For those consuming 201-300 kWh, the increase is VND32,350.
- Usage of 301-400 kWh results in an additional cost of VND47,050 per month, while households using 400 kWh or more will be charged VND62,150 extra.
EVN estimates that 17.41 million households consume 200 kWh or less, reflecting 61.35% of total household electricity users. On average, these households will see their bills rise by VND13,800.
Overall, EVN concludes that the increase will have a moderate effect on low-usage households, while higher electricity consumers will experience a more significant rise in their bills.
Reasons for the Price Increase
EVN provided three main reasons for this electricity price adjustment:
- The national energy development strategy mandates a shift to market-driven pricing for all electricity by 2030, promoting transparency in pricing mechanisms.
- The price adjustment aligns with the Prime Minister’s Decision No 5, issued on March 26, 2024, regarding average retail pricing mechanisms.
- Rising costs of electricity production inputs, including coal, oil, gas, and variations in the dollar exchange rate, have significantly impacted overall costs, which now account for 83% of production expenses.
Challenges in Power Generation
In 2023, adverse weather conditions linked to climate change and El Niño resulted in poor hydrological states across northern reservoirs, compelling EVN to rely on thermal power sources to maintain stability in electricity supply.
As a result, the composition of power production shifted significantly, with hydropower’s contribution declining from 38% to 30.5%, while costs associated with coal and oil-fired plants rose. Despite increased electricity demand, the lack of new generation capacity has necessitated purchasing more expensive power sources.
This situation illustrates the growing challenges in maintaining an efficient electricity supply while balancing production costs.
