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Vietnam: Consumers to negotiate electricity prices in 5 years, when monopoly is removed
When the competitive electricity retail market takes shape, EVN will no longer be the only retailer and people will be able to choose their retailer and negotiate prices.
The Prime Minister on June 9, 2020 sent a dispatch to the Ministry of Industry and Trade (MOIT) and the State Capital Management Committee on the building and development of the competitive electricity retail market in Vietnam.
This is one of the latest instructions by the Prime Minister related to the competitive electricity retail market, serving as the foundation for the trial operation of the market, slated for 2021.
Prior to that, in a plan to develop the competitive electricity retail market submitted to the Prime Minister on February 12, MOIT outlined specific development stages as follows:
Period 1 (2020-2021): the preparation period for the competitive retail market to become operational in 2022-2023.
Period 2 (2022-2023): big electricity consumers buy electricity from cash market.
Period 3 (2024-2025): big electricity consumers choose retailers.
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| When the competitive electricity retail market takes shape, EVN will no longer be the only retailer and people will be able to choose their retailer and negotiate prices. |
Period 4 (after 2025): the retail market will be expanded with more customers allowed to buy electricity on the spot market, and customers throughout the country will have the right to choose retailers.
This means that people will be able to join the retail market and choose retailers after 2025.
At present, the electricity retail price is controlled by the State. But when the electricity competitive retail market becomes operational, this principle will change.
As for the customers who will join the competitive retail market, the retail price will be defined by retailers and consumers based on bilateral contracts to be made after the negotiations between the two sides, without intervention from the State.
Meanwhile, customers who don’t join the competitive retail market will be able to sign contracts on buying electricity with the default electricity retailers in the areas where they are located. The prices in the contracts will be set by appropriate agencies.
According to Ha Dang Son, director of the Center for Energy and Green Growth Research, the current average electricity retail price is calculated based on the total costs (production, management, transmission costs) and loss during transmission and distribution.
The figures are reliable as they are audited every year and the calculation is supervised by representatives from ministries and organizations.
However, when the competitive retail market becomes operational, retail companies will have to calculate the cost prices and seek cheap supply sources in the context of the short supply.
“So, will there really be competitive retail prices if the prices to be offered in the wholesale market are not floated at levels higher than the current levels?” he asked.
Luong Bang
Source: https://vietnamnet.vn/en/business/consumers-to-negotiate-electricity-prices-in-5-years-when-monopoly-is-removed-667712.html