The Ministry of Industry and Trade (MoIT) is proposing a new electricity pricing structure for residential customers. This initiative, part of the draft Electricity Law submitted to the Ministry of Justice, seeks to introduce time-of-use (TOU) tariffs – including peak, off-peak, and normal rates – for households. The goal is to encourage consumers to shift their electricity usage away from high-demand periods. This system will be implemented progressively, targeting eligible households as technical conditions allow, rather than being applied universally.

Currently, TOU pricing is primarily applied to industrial and commercial customers. Residential users, however, are charged based on a tiered retail tariff. While this tiered system has been effective in developing nations like Vietnam, where electricity demand grows annually by over 10% and energy intensity is high, the MoIT recognizes the need for evolution. The existing structure promotes energy conservation and ensures affordability for lower-income households.

Electricity workers maintain the national grid in Long Dien commune, Dong Hai district, Bac Lieu province, 9/5/2020. Photo: Nguyet Nhi

Residential electricity consumption represents the second largest share of the nation's total power usage, surpassed only by the industrial sector. This consumer group has proven more challenging to influence regarding electricity usage patterns compared to businesses. With electricity demand projected to rise and new supply development facing increasing difficulties, the MoIT emphasizes the need for residential customers to adopt more efficient energy-saving practices.

Expanding the hourly electricity pricing mechanism is expected to motivate residents to adjust their usage times, reducing demand concentration during peak periods. This adjustment would alleviate operational pressure on the power system and optimize the use of existing electricity sources. Vietnam's power consumption frequently surges, particularly on hot summer evenings when air conditioning use peaks. These are also times when solar power generation is inactive, necessitating the activation of higher-cost power sources to meet demand.

The MoIT previously established new electricity usage time frames for customers already on TOU tariffs. These regulations adjusted peak hours to focus on the evening, from 17:30 to 22:30, to better reflect the power system's actual demand trends.

Phuong Dung