In the Draft Law amending and supplementing a number of articles of the Electricity Law being appraised by the Ministry of Justice, the Ministry of Industry and Trade believes that it is necessary to abolish the single buyer model through policies on transferring electricity purchase and sale contracts signed by Vietnam Electricity Group (EVN).
Talking to Lao Dong Newspaper, Dr. Nguyen Xuan Quang - Institute of Energy Technology (Hanoi University of Science and Technology) assessed this as a positive proposal. EVN is the only electricity buyer that has existed for many years, but this model is no longer suitable, especially in the context that the current electricity price calculation method plus transmission costs still have many inadequacies.
When there is only one buyer and applying a nearly uniform electricity price across the country, it is clearly not reasonable. To overcome this, it is necessary to clearly separate the components of electricity prices - electricity generation prices, transmission prices, system regulation prices and later energy storage prices instead of putting them together into an average price as at present.
If electricity trading units in each region buy electricity from different sources, and at the same time separately account for and announce transmission costs by region, it will bring two benefits. First, it creates competition in electricity trading. Second, consumers clearly see where the electricity price is, where the transmission cost is, instead of a single unclear number as it is now," said Dr. Nguyen Xuan Quang.
Analyzing further, Dr. Nguyen Xuan Quang said that the electricity market is designed according to a chain of power generation units selling electricity to wholesale units, then wholesale units reselling it to retail units and users. However, currently EVN is almost the only wholesale unit, and also performs retail sales. Therefore, electricity prices in localities are almost the same, leading to a very complicated cross-subsidy mechanism.
Dr. Nguyen Xuan Quang gave an example, electricity prices in Phu Quoc are almost similar to many localities on the mainland, while EVN has to invest in an underground cable system with very high costs to bring electricity to the island.
In fact, the investment and transmission costs are mainly allocated on average to all regions in the country through the cross-subsidy mechanism, not calculated separately into the electricity price in Phu Quoc. This makes the cost allocation mechanism between regions not really reasonable and not transparent.
If electricity trading centers are formed by region, each unit will optimize electricity purchases from which power plant, which area, and at the same time, specific costs such as the case of Phu Quoc will be seen more clearly, thereby improving efficiency and ensuring fairness.
EVN's being a'monopoly' unit to buy electricity may not necessarily bring benefits to EVN itself. Conversely, EVN must solve a very complex cross-subsidy problem," Dr. Nguyen Xuan Quang emphasized.
According to this expert, when separated into many wholesale units, this problem will be partially solved, but another consequence will arise. That is, electricity prices in remote and isolated areas - where electricity supply costs are very high, may increase significantly. Then, if we want to continue to support these areas, the State needs to have a separate subsidy mechanism instead of cross-subsidy as it is now. This approach will be much more transparent than continuing to maintain the cross-subsidy mechanism between regions.
