How power bills can kill

Experts, however, point the finger at the policy of applying the power consumption ladder that has stayed put for years despite drastic changes in the economic landscape.

Many consumers, say the local media, have been shocked at the power bills just sent to them, after the power hike took effect on March 20. The charges have skyrocketed though their power consumption has remained as normal as ever.

A man at EHome 3 apartment building in HCMC’s Tan Binh District says in Tien Phong that his power bill for April jumped by four times over March and nearly five times against February. Specifically, “my February bill was VND290,000, which rose to VND320,000 in March and VND1.25 million for April, with the power volume of 482kWh consumed,” says the man known by his first name of Vinh in the paper.

Thousands of other consumers have also voiced their complaints over the steep rise in power bills, as seen in local media. As of April 26, up to 13,000 consumers had lodged their complaints to power companies countrywide, says Tuoi Tre, citing data from EVN.

However, EVN says the average increase in April’s bills is only some 35%, which the company explains as normal due to higher power consumption in the recent past. Commenting on this 35% rise in power bills, EVN says power consumption in March — with power bills issued for April — was much higher than in February due to the longer month, at 31 days against 28 days, or an increase of 10.7%. In addition, the average daily demand also went up by some 16% due to higher temperatures, and coupled with an 8.36% price hike approved by the Government, the final power bill for the month has gone up that much, Nguyen Xuan Nam, deputy general director of EVN, is cited by Dan Viet as saying.

Also according to EVN, as of April 26, up to 57.2% of households in HCMC saw their electricity bills rising by over 30% over the previous month due to higher power consumed.

Data on power consumption over the past few weeks also supports such claims.

In Hanoi, power consumption rose from 47 million kilowatt hours a day in late March to 58 million kilowatt hours in early April, and peaked at 63.4 million kilowatt hours on April 20, according to the news site VTC. Meanwhile, over the corresponding period, power consumption in HCMC rose from 71 million kilowatt hours to over 83 million kilowatt hours and topped at over 90 million kilowatt hours.

All factors make the higher power bill reasonable. However, many experts disagree, saying the key agony for consumers rests with the power consumption ladder policy that has persisted for years.

In early 2014, the Prime Minister issued a decision approving the power consumption ladder policy. Under the policy, residential power consumption is divided into six different ladder rungs for progressive power tariffs. Currently, the minimal consumption of 50kWh a month is subject to a price of VND1,678 a kilowatt hour, while the next level up to 100kWh bears a price of VND1,734, and the following 100kWh is subject to a tariff of VND2,014, all exclusive of value-added tax. Then, the power tariff surges strongly for every next 100kWh, at VND2,536, VND2,834, and VND2,927 a kilowatt hour.

Most consumers incurring a steep rise in their power bills are those who consume high volumes of power.

The volume of power consumption for each rung, says the news site zing.vn, is no longer suitable. The power demand over the past six years has surged alongside the per capita income growth of over 30%.

In 2014, according to zing.vn, the proportion of households using less than 50kWh a month accounted for 21%, but this proportion fell to 17% in 2017 and just 15.5% last year. Meanwhile, the number of households consuming more than 400kWh has increased by half between 2014 and 2018.

Therefore, according to the news site, the six ladder rungs in the power price policy are no longer suitable, especially right so in the future when the per capita power demand rises alongside the pace of economic growth.

Meanwhile, Ngo Tri Long, former head of the Research Institute for Market and Pricing at the Ministry of Finance, pointed out the illogical pricing for each rung of the consumption ladder. Only in the lower rungs 1 and 2 are the prices somewhat lower than the average price approved by the Government, while prices go up far steeper in the upper rungs of the consumption ladder, the veteran expert says in Lao Dong.

“The Government entrusts the power sector to make calculations so that the commercial power will be charged at the average tariff of VND1,864 per kilowatt hour, but given the prevailing ladder rungs, the power sector will reap benefits, putting consumers at a disadvantage,” he is quoted as saying.

In giaoduc.net, Long says the ladder rungs are only considered appropriate when the total revenue divided by the amount of commercial power volume makes the average price approved by the Government, but the power sector has not been transparent in this calculation.

Currently, most households consume between 200 and 300kWh a month, and the power tariff for this ladder rung should be only 10% or 20% higher than the average power tariff endorsed by the Government. In reality, consumers under this ladder are paying a price which is 50% higher than the average, Long says in Lao Dong.

Nguyen Tien Thoa, a pricing expert and president of the Vietnam Pricing Evaluation Association, seconds the point, saying in the news site Vietnamnet that the number of households consuming less than 50kWh a month is minimal. Therefore, the power consumption ladder should be redone so that the majority of people could pay the average tariff instead of the steeper ones.

The Ministry of Industry and Trade has estimated that Vietnam’s power demand would increase by 10% annually and by 2030, and the per capita consumption will rise by threefold over 2018 to some 6,000kWh, according to zing.vn.

While the power sector, specifically EVN, has all reasons to claim that there is no abnormality in the monthly power bill following the price hike approved in March, people’s agony rests with the power volume assigned for each ladder rung, as well as the wide gap between prices of such ladder rungs. And, power bills can inflict more suffering in the absence of transparency on the part of State utility companies.