On September 21, the National Assembly Standing Committee gave opinions on the draft Law amending and supplementing a number of articles of the Electricity Law. Notably, regarding the electricity price mechanism, the draft supplements regulations on the application of retail electricity prices according to peak hours, off-peak hours and normal hours for residential customers when technical conditions permit, supplementing the authority of the Minister of Industry and Trade to approve the wholesale electricity price framework.
According to the drafting agency, the application of hourly electricity prices for residential customers aims to encourage people to switch to using electricity during off-peak hours. Through this, this policy contributes to regulating electricity demand and improving the operation efficiency of the power system.
How will households pay for electricity?
Currently, electricity bills for households are calculated based on electricity consumption in the month and apply a tiered electricity price schedule. The more electricity used, the higher the output of the higher levels will be calculated at a higher price. This calculation method does not distinguish whether households use electricity during peak hours, off-peak hours or normal hours.
If switching to applying hourly electricity prices, the electricity bill calculation method of households will have a significant change, when the time of electricity use becomes an important factor besides total electricity consumption. With the same amount of electricity used, but consumed in different time frames, the amount to be paid may be different.
For example, two households consume 800 kWh of electricity per month, but electricity bills may vary depending on the time of use. With hourly electricity prices, the amount of electricity consumed will be divided according to peak hours, normal hours and off-peak hours.
Households using a lot of electricity during peak hours will have to pay higher costs than households that can shift part of their electricity demand to off-peak hours.
Talking to Lao Dong, energy expert Dao Nhat Dinh, member of the Scientific Council of Vietnam Energy Magazine, said that the orientation of applying electricity prices according to usage time for residential customers is in line with international trends and necessary for the operation of the power system, contributing to limiting the risk of power shortage.
However, the implementation needs a roadmap, while fully meeting the technical and institutional conditions.
According to expert Dao Nhat Dinh, hourly electricity prices can only be applied when customers are installed with electronic meters capable of accurately recording electricity consumption for each period of time in the day. This is also the reason why the drafting agency proposed to only apply to customers "when technical conditions permit".
Regarding infrastructure, in cities, current technical conditions are relatively favorable for deployment. With electronic meters, recording electricity consumption by period of time can be done," said Mr. Dao Nhat Dinh.
Some areas can be selected for piloting
However, according to expert Dao Nhat Dinh, an issue that needs special attention is the reaction and ability to change people's electricity usage habits.
He believes that hourly electricity prices may be one of the solutions to contribute to reducing the pressure of power shortages and can be studied for pilot implementation. However, the specific characteristics of daily life make it not possible for every household to change the time of electricity use.
Another important issue is to design hourly electricity prices reasonably. The difference between peak and off-peak hour electricity prices needs to be large enough to create motivation for people to change their electricity use behavior, but at the same time, it must ensure stability, ease of understanding and not cause major disruptions to life.
According to expert Dao Nhat Dinh, the difference needs to be significant enough for electricity users to see the economic benefits of changing the time of electricity consumption.
The difference must also be relative, from 20-30% or more so that people can change their behavior," Mr. Dinh said.
According to the expert, the application of the hourly electricity price mechanism for residential customers needs to be implemented cautiously. First of all, some areas can be selected for piloting and impact assessment, then promote propaganda and gradually expand it.
Along with designing pricing and ensuring technical conditions, communication and guidance on effective electricity use also play an important role. People can only change their behavior when they clearly understand the objectives of the policy, know how to adjust the use of electrical appliances in their homes and see specific economic benefits from that change.
