The average electricity retail price of VND2,103.1159 per kwh has been applied since October 11, instead of VND2,006.79 per kwh, which means a 4.8 percent price increase, or VND96.32 per kwh.

According to EVN (Electricity of Vietnam), the price hike will affect many different groups of clients, depending on their consumption level and electricity use.

There are about 548,000 clients who use electricity for service businesses and pay about VND5.17 million a month each. After the price adjustment, each client of this group would have to pay VND247,000 more.

There are about 1.921 million production households, each of which pays an average of VND10.38 million a month, and the additional amount of money they will have to pay is VND499,000 a month. 

Regarding non-business public units, there are about 691,000 clients and each of them pays VND1.93 million a month. With the price adjustment, they will have to pay VND91,000 more.

As for clients using electricity for daily activities, the impact will be different depending on the number of kwh they use.

Households using less than 50kwh a month will have to pay VND4,350 more.

Households using 51-100kwh will have to pay VND8,850 more.

The households using 101-200kwh, accounting for 34.31 percent of households using electricity for daily activities, the largest group of clients, will have to pay VND19,250 more.

The households using 201-300kwh will have to pay VND32,350 additionally.

The figures would be VND47,050/household/month for clients using 301-400kwh, and VND62,150 for clients using 400kwh or more.

EVN estimated that there are 17.41 million households using 200 kwh or less, or 61.35 percent of the total number of households that use electricity for daily activities. The average increase in electricity bills of every household using less than 200 kwh will be VND13,800/household.

EVN concluded that the impact on households using electricity for daily activities (consuming less than 200 kwh a month) will be moderate, while clients consuming more electricity will bear sharper increases.

Coal, oil, gas prices hike

EVN cited three reasons behind its decision to raise electricity retail prices.

Under the national energy development strategy by 2030, with a vision towards 2045, Vietnam will ‘apply market prices to all kinds of power’, and will ‘remove all barriers to ensure transparency in electricity pricing’, i.e., the prices will be determined by market supply and demand.

The latest adjustment of retail prices is made in accordance with the Prime Minister’s Decision No 5 dated March 26, 2024 stipulating the mechanism that adjusts average retail prices.

The electricity production costs have risen because of price increases of many input materials, including coal, oil, and gas, and the dong/dollar exchange rate.

EVN said input material prices have a big impact on electricity generation costs, which account for 83 percent of total production costs.

In 2023, due to climate change and El Nino, hydrological conditions were unfavorable. Most large hydroelectric reservoirs in the North saw the water level reduced to dead level at the end of the dry season (from mid-May to mid-June).

Meanwhile, some thermal power units suffered breakdowns, which could not provide electricity as demanded, and the sun and heat lasted a long time and on a large scale.

Therefore, EVN had to mobilize all thermal power sources, including oil-run power plants to ensure stable power supply for daily use and enterprises.

Regarding the structure of power sources in 2023, hydraulic power which has low costs, fell from 38 percent to 30.5 percent, while more expensive power sources (coal-run power plants) and very expensive sources (oil-fired power plants) rose from 35.5 percent to 43.8 percent, according to EVN.

While the additional charge demand has been increasing steadily year after year, there have not been many power generation works put into operation recently. The total volume of electricity Vietnam has bought increased by 11.8 billion kwh over 2022, or a 4.6 percent increase.

To satisfy increasingly high demand amid the low proportion of low-cost power sources, EVN has had to buy more electricity from power generation types with higher production costs.

Tam An