Vietnam power giant mulls replacing tiered pricing with flat rate
Vietnam power giant mulls replacing tiered pricing with flat rate
Vietnam’s power giant EVN is seeking public opinion as to how the current tier-based mechanism to calculate electricity prices should be changed to serve consumers better.
EVN, or Vietnam Electricity, has come up with three different ways to bill people for their power consumption, it said in an announcement on Wednesday.
The first option is to keep the current six-tier mechanism, in which electricity is priced between VND1,484 and VND2,587 per kWh, unchanged, according to EVN.
The second plan is to apply a flat rate to electricity pricing, with a suggested charge of VND1,747 a kWh, which is the average of the six rates in the tier-based pricing scheme.
The last one is to keep the tiered pricing mechanism, but with fewer tiers.
The current six-tier electricity price is as follows:
EVN admitted that the tier-based pricing scheme is complicated, in which the more power people consume, the higher prices they have to incur.
The flat rate of VND1,747 a kWh, in the meantime, would upset consumers who use fewer than 240 kWh a month, as they would no longer be able to enjoy the low prices of VND1,484 and VND1,533 a kWh.
Such pricing would benefit large electricity consumers, while hurting the low-income earners, according to EVN.
For the third proposed pricing scheme, there would be either three or four tiers to calculate electricity prices, and EVN has five different scenarios for this mechanism.
One of the five is that the first tier would be VND1,501 per kWh for consumption of less than 100 kWh a month, while the second and third tiers would be VND1,907 per kWh (less than 200 kWh a month) and VND2,557 per kWh (less than 300kWh a month).
EVN encourages members of the public to offer comment, feedback and suggestions regarding the three proposed pricing schemes, and is set to hold conferences and seminars to listen to experts and industry insiders, according to its announcement.
An official from the Ministry of Industry and Trade said EVN should prepare a pricing plan that will not greatly affect needy and low-income consumers, while encouraging people to save energy.
But the three proposed options show that EVN wants to let people use more and pay less.
A calculation by Tuoi Tre (Youth) newspaper shows that those who use more than 300 kWh a month will pay less than they currently do if the flat rate or three-tier pricing scheme is applied, whereas those with electricity consumption from 0 to 300 kWh will pay more.
“The flat rate will hurt low-income earners and will not encourage saving energy as the price is the same for both small and large power consumers,” the trade ministry official told Tuoi Tre.
Users will not have to watch their power consumption, which will lead to rising electricity demand, he added.
“Each of the three plans has its own strengths and weakness,” the official said.
“Everyone can give feedback or suggest more feasible and effective plans for EVN.”
EVN said without giving a specific timeline it will make a final report based on the feedback of local consumers and experts to submit to the prime minister for approval.
