Consumers in Vietnam will hopefully be able to buy electricity from sellers other than the country’s current sole power utility, Vietnam Electricity (EVN), as a wholesale power market is set for launch next year.
EVN, which now holds exclusive control of power in the country, will lose its monopoly in 2016 thanks to a competitive electricity wholesale market, Nguyen Anh Tuan, head of the Electricity Regulatory Authority of Vietnam (ERAV), told Tuoi Tre (Youth) newspaper.
Both EVN and ERAV are managed by the Ministry of Industry and Trade.
The ministry is expected to approve the detailed plan on how the wholesale market will work by the end of this month, according to the ERAV official.
Tuan said the wholesale market will be designed in a way that will “increase competitiveness and reduce EVN’s monopoly.”
There are now many power generators in Vietnam, but all of them have to sell electricity to one sole buyer, EVN.
The power utility then distributes electricity to consumers via five regional units, which are in charge of the north, central, and southern regions, and Hanoi and Ho Chi Minh City.
“In the wholesale power market, the [power] generators will be able to sell to other units, not just EVN,” Tuan said.
“And businesses with huge power demand, such as industrial parks or steel plants, can buy electricity directly from the generators, rather than through EVN.”
The official said such a mechanism will make power prices more competitive.
Vietnamese power prices are currently regulated by the state.
Once the power wholesale market comes into being, the five EVN-run units will play a smaller role in the market.
“Customers will not have to buy through these five companies,” Tuan said.
“The law on electricity also allows qualified economic entities to become power wholesalers, which will buy from the wholesale market and distribute to [power] retailers, as the five EVN units currently do.”
Tuan said such power wholesalers have to compete with each other and with the five EVN firms to win customers, which will thus benefit electricity users.
“The EVN units have to try to cut prices, otherwise they will lose major customers such as the industrial parks,” Tuan said.
“They also have to improve the quality of other services to keep customers.”
As for individual electricity users, Tuan said they can choose either to keep buying power from EVN, at prices regulated by the state, or from the electricity wholesalers, with prices changing in accordance with market fluctuations.
Tuan said EVN will also set a certain limit on power that its regional units must buy from the wholesale market to prevent them from merely buying from one source.
“It can be said that once the competitive wholesale market is launched in 2016, EVN’s exclusiveness in buying and selling electricity will be gone,” he concluded.
Consumers in Vietnam usually complain that they have to pay high power prices, while EVN has been repeatedly criticized for taking advantage of its monopoly.
Power users are also upset by the tiered price calculation used by EVN.
EVN sets six tiers for electricity prices, with prices rising progressively as power consumption reaches the higher tiers.
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