According to the proposed five-tier electricity pricing structure (replacing the current six-tier system) submitted by the Ministry of Industry and Trade for review by the Ministry of Justice, households using 401 kWh or more per month will face a progressive pricing scheme that is 162-180 percent higher than the average retail price.
On March 22, the Ministry of Industry and Trade announced that it had completed the draft Decision of the Prime Minister regarding the retail electricity pricing structure after consulting with relevant ministries and agencies. The draft is now being sent to the Ministry of Justice for review before being presented to the Government.
After consulting with relevant ministries, local authorities, and associated agencies, the Ministry of Industry and Trade announced that 92.2 percent of the responses supported the proposal to reduce the number of household electricity pricing tiers from six to five. They also agreed with the proposed adjustments in proportion to the average retail electricity price.
Specifically, the draft electricity pricing plan outlines five tiers: Tier 1 for the initial 100 kWh, Tier 2 for usage between 101 and 200 kWh, Tier 3 for usage between 201 and 400 kWh, Tier 4 for usage between 401 and 700 kWh, and Tier 5 for usage of 701 kWh or more. Under this structure, if households consume 400 kWh or less per month, the electricity prices will remain unchanged. However, for consumption between 401 and 700 kWh, the retail electricity prices will be set at 162 percent of the current average retail price, and for consumption of 701 kWh or more, it will be set at 180 percent of the current average retail price.
According to the Ministry of Industry and Trade, the proposed five-tier electricity pricing scheme features a reasonable increase in prices between tiers. The difference between the first and last tiers is two times, aligning with the global trend observed in many countries, aimed at promoting energy-efficient and cost-effective electricity usage.
Nevertheless, according to the Ministry of Industry and Trade, in offering feedback on the draft, the Vietnam General Confederation of Labor contended that the proposed electricity pricing mechanism is unreasonable. They pointed out that household electricity prices remain higher than the production power prices for businesses. Currently, electricity for production is priced at only 52 percent of the average rate, while household electricity prices are generally higher. The labor union organization argued that production and business electricity prices are still being cross-subsidized by household electricity prices.
Sharing the same perspective, the Vietnam Electricity Association also emphasizes the need for the structure of retail electricity prices to ensure that household electricity rates do not surpass those for production and tourism services. This means that household electricity rates should not be used to offset the costs of production and tourism service electricity.
According to the Electricity Regulatory Authority of Vietnam under the Ministry of Industry and Trade, this is still a draft and subject to change. After receiving legal review from the Ministry of Justice, this entity will continue to complete the necessary procedures as required so that the Ministry of Industry and Trade can submit the draft to the Prime Minister for consideration and decision in alignment with other regulatory documents.
