Maximum savings to cope with electricity price increases
The fact that Vietnam Electricity Group - EVN increased the electricity price from 2,006.79 VND (November 2023) to 2,103.11 VND/kWh (from October 11) made Mr. Nguyen Hoang Minh - CEO of a food production enterprise in Hanoi - very worried.
He said that recently, other production materials such as packaging and product shells have increased by more than 20%. However, his company does not dare to increase product prices partly because it wants to retain customers, partly because many contracts have been signed since the beginning of the year, making it difficult to adjust, and now that the electricity price has increased to VND2,103.11/kWh, the difficulties for the company will be even greater.
"I know the electricity industry is facing difficulties due to the sudden increase in fuel prices. Increasing electricity prices is also urgent at this time, but increasing by 4.8% is really a huge challenge for businesses, especially when the whole country is working together to overcome the severe consequences left by Typhoon Yagi (Typhoon No. 3). Increasing electricity prices also indirectly increases other costs, including the prices of input food products, so businesses are suffering a double impact," said Mr. Minh.
To cope with the increase in electricity prices, Mr. Minh said that businesses must take proactive measures such as optimizing the use of electrical equipment in the office, especially air conditioners, computers, and lighting. At the same time, they must educate employees to use electricity economically and reasonably, turn off unnecessary electrical equipment, and re-evaluate machines that consume a lot of energy.
Ms. Nguyen Thi Thuan (Hanoi) - owner of a snail restaurant on An Khanh Street (Hoai Duc District, Hanoi) - also said that after storm No. 3 (Yagi) passed, the prices of essential food items, especially green vegetables, increased sharply. Now, the retail price of electricity continues to increase, forcing her to change the restaurant's menu by increasing it by more than 10%.
Mr. Nguyen Duc Thang - General Director of Dap Cau Garment Company - said that the increase in electricity prices has caused many other costs to "follow suit", causing production costs to increase by 10% since the beginning of this year. Product prices have increased, competitiveness has decreased, forcing businesses to find ways to reduce all types of costs to minimize savings, especially reducing electricity consumption.
The preferred solution is to rearrange production hours to be more reasonable, reduce production time during peak hours and increase efficiency and production performance during off-peak hours with low electricity prices. In particular, this enterprise is also calculating to install additional rooftop solar power systems, both proactively supplying electricity and meeting green standard orders from customers.
What does EVN say about the electricity price increase?
Explaining the increase in retail electricity prices, on October 14, an EVN representative said that in reality, the cost of electricity production is affected by many input factors regarding electricity output, coal, oil, gas prices, foreign exchange rates, etc. In particular, the source structure fluctuates in an unfavorable direction when sources of electricity purchase with low prices decrease, and sources of electricity purchase with expensive prices increase compared to 2022.
EVN said that although the prices of coal and gas fuels in 2023 decreased compared to 2022, they are still high compared to the period of 2020-2021. In particular, the price of blended coal (between domestic and imported coal) in 2023 supplied by Vietnam National Coal - Mineral Industries Group and Dong Bac Corporation to thermal power plants is still maintained at a high level, 29% to 35% higher (depending on the type of coal) than the price of blended coal applied in 2021 (the period before coal prices increased dramatically in 2022-2023).
Load demand has increased over the years while there are not many new low-cost power projects coming into operation. The total purchased and imported electricity output at the delivery point increased by 11.8 billion kWh compared to 2022, equivalent to an increase of 4.6%.
To meet the increasing demand for electricity, EVN must purchase additional electricity from sources with production costs much higher than the retail price of electricity, such as thermal power sources using imported coal and oil-fired thermal power.
Speaking with Lao Dong, Mr. Nguyen Xuan Nam - Deputy General Director of EVN - informed that the actual electricity price increased much higher, however, EVN has balanced social security factors, reduced the impact on people's lives and the economy, so it decided to increase by 4.8%.
According to Mr. Tran Viet Hoa - Director of the Ministry of Industry and Trade, if the electricity price remains the same, EVN will continue to lose money. This will affect the preservation and development of state capital at EVN, greatly impact the production and financial activities of this group, affecting the assurance of electricity supply and energy security.
How will stock groups be affected by the increase in electricity prices?
MBS Securities analysts believe that the increase in electricity prices is a positive signal for electricity stocks because it will support the cash flow of power plants. Meanwhile, stocks in the steel, cement, chemical, paper, etc. industries will be affected in the opposite direction. However, it should be noted that the level of stock price fluctuations depends on many other factors, in addition to electricity prices.
How much more will electricity users have to pay?
According to EVN, 17.4 million households (31%) with electricity usage of 200kWh/month or less will have an additional cost of VND13,800/month. This increase will not have a significant impact. For households with electricity usage of over 200-300kWh/month, the average additional cost will be VND32,000/month. For households with electricity usage of 300-400kWh/month, the additional cost will be VND47,000. For households with usage of 400kWh or more, the additional cost will be more than VND62,000.
For service business customers (547,000 customers), each household will pay an average of 247,000 VND more. For production households (1.921 million customers), this increase will increase the electricity bill to 499,000 VND/month; for enterprise customers (691,000 customers), an increase of 91,000 VND.
