Electricity prices have 4 major shortcomings

According to expert Nguyen Tien Thoa, the first general problem is that electricity prices have not been implemented according to market mechanisms. Output prices do not reflect fluctuations in those costs; sometimes the adjustment takes too long, sometimes the adjustment is not calculated correctly, not fully, and does not ensure compensation for all costs incurred in electricity production and business. Therefore, electricity production and business face many difficulties.

“The latest data for the two recent years of 2022 - 2023 shows that this management method has caused a loss of about 47,500 billion VND for the electricity industry. This is a major difficulty in improving the electricity industry's cash flow to invest in and develop sources and grids,” said Mr. Thoa.

Second, we expect and assign multi-purpose tasks to the current electricity price. We want to calculate correctly, calculate sufficiently, ensure cost recovery, but also encourage investment attraction, ensure social security, ensure energy security, and control inflation.

The expert said that there are many goals and some of them are in conflict with each other. It is difficult to harmonize those goals and it does not guarantee the desire we set. Therefore, we must have a reasonable calculation of the role of electricity prices, which is the key.

Third is the inadequacy in the current electricity price cross-subsidy mechanism, which has been prolonged and the handling roadmap is unclear.

“Associate Professor Bui Xuan Hoi has participated in the Electricity Price Improvement Project since 2019 and has also calculated to gradually reduce cross-subsidies, but in the end we have not been able to do it. What does cross-subsidy represent here? Cross-subsidy between groups of household electricity consumers - high levels subsidize low levels, cross-subsidy between household electricity prices in production at a certain level.

Of course, the price of electricity in production must be lower because low-voltage electricity consumption is more expensive, but there is still a certain cross-subsidy between electricity for daily life and electricity for production. And another point is the cross-subsidy of electricity prices between regions. Electricity in island communes and districts is usually 7,000-9,000, but we still sell 1,000-2,000, which means taking from low areas to compensate for high areas..." - expert Thoa said.

The fourth shortcoming, which he also highly agrees with and recommends, has been raised in Resolution 55 of the Politburo : the electricity price has not been separated from the social security policy. We have not been decisive in implementing social policies.

The expert said that it must be calculated correctly and fully according to market principles, but especially transparent. This is also required by the Politburo, the Government, and the National Assembly . Electricity prices must be transparent, and all barriers must be removed.

"Of course it is not a floating market, the market must be regulated by the State, there must still be a State monopoly, the private sector cannot participate 100%. We must share this problem" - the expert emphasized.

According to Mr. Nguyen Tien Thoa, the first concern of consumers here is having enough electricity to use. Therefore, he agrees that the Electricity Law should be amended and that there must be fundamental reform in pricing.

Assoc.Prof.Dr. Bui Xuan Hoi

Associate Professor, Dr. Bui Xuan Hoi, an energy economist, also said that while Vietnam's electricity prices still serve multiple purposes, other countries in the world have made a relatively clear distinction. "Of course, it is not true that this product is 100% market-based, but the problem is how to regulate it?" - he asked.

According to Associate Professor, Dr. Bui Xuan Hoi, the price structure usually has two components: One is the calculation of the power cost, which we call the power price (subscription price); Two is the cost of electricity, after the subscription, you pay for what you use. This is usually the approach of countries around the world.

Looking back at Vietnam's price system, the current method of calculating the average retail electricity price, he said that there are limitations, but it is not the core of the current difficulties of the electricity industry. The most important thing is still the story of price management. "If it is not possible to manage electricity prices according to the market mechanism immediately, all aspects of regulation must gradually move towards the market" - the expert noted.

According to experts, electricity prices need to be calculated correctly and fully according to market principles, but especially transparent. This is also required by the Politburo, the Government, and the National Assembly.

Need to improve electricity price mechanism, increase competition in retail

National Assembly Delegate Phan Duc Hieu - Standing Member of the National Assembly's Economic Committee.

To solve the above "bottlenecks", National Assembly Delegate Phan Duc Hieu - Standing Member of the National Assembly's Economic Committee, assessed that the Government and the Prime Minister have recently been very determined in amending the Electricity Law. This is an opportunity, we must take advantage of this opportunity, otherwise it will take us 5-7 years to fix it.

“I agree with the current viewpoint of calculating prices to determine production prices. Policy makers must always know first what percentage of the cost of producing 1 kWh of electricity is. This is very important in promoting more savings. Just calculate correctly and fully, announce it publicly, and compare it with other countries. All resources must be identified correctly and fully, and accounted for economically before production,” Mr. Hieu expressed.

According to Mr. Hieu, it is necessary to separate the electricity price and not include too many policy goals. Regarding the structure of the electricity industry, which includes both state-owned and private enterprises, the financial mechanism here needs to be transparent, which is social subsidy, which is price compensation, which is business, must be separated.

In addition, Mr. Hieu also said that in selling electricity and calculating prices, we must increase competition and market nature. Market nature here has many factors such as when input prices fluctuate, output prices can be adjusted. If there are fluctuations that we cannot control, leaving it open for 6 months and 1 year to operate, that is not the market. We must be more market-oriented in the way we operate.

“Next is competition in retail. Obviously, using the market mechanism more will reduce prices because with competition there is a tendency to control monopoly, consumers will have the opportunity to enjoy more competitive prices” - Mr. Hieu expressed his opinion, at the same time thinking that the price framework and price calculation method according to Decision 28 do not really encourage the use of energy saving. Therefore, there should be policies to promote production and business using energy saving.

Source: https://baophapluat.vn/gia-dien-dang-co-4-bat-cap-lon-post522467.html