Power market debate rumbles on

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>> Vietnam pilots first phase of energy market experiment

According to Electricity Regulatory Authority of Vietnam (ERAV) head Dang Huy Cuong, Vietnam’s competitive power generation market (VCGM) would operate under the mandatory cost-based gross pool scheme. Accordingly, power generators will take the initiative in launching price offers in the market. Successful candidates will be the ones offering most competitive prices.

Cuong said electricity price would still be managed by the state in the competitive power market’s trial operation which starts from July 1, 2011. Accordingly, power consumers pay their monthly electricity bills based on the on-going state regulated price bracket despite the price between power generators and the single buyer Electricity Power Trading Company (EPTC).

In light of Decision 24/2011/QD-TTg dated April 15, 2011, electricity prices will be fixed based on market rules from June 1, 2011. However, current electricity prices have yet to be set following the market mechanism.

This is partly because many sorts of debts and losses incurred by power generators and Vietnam’s power authority Electricity of Vietnam (EVN) were being suspended by the state, not counted on the power production cost in 2011.

“Electricity prices will sharply rise if all relevant expenses are accounted on the production costs. This will put serious pressure on inflation. Therefore, power price revisions must follow a roadmap, our intention to set power prices based on market rules may even be delayed until 2013,” said Minister of Finance Vu Van Ninh.

“Operating competitive power market means all relevant expenses will be fully and adequately counted into power production costs. If electricity selling prices to EVN are unchanged, power generators cannot give accurate price offers for healthy market performances,” said a power market regulatory expert.

That expert also voiced concerns over the fact manipulations might occur in the power market in the mid-trial period when power generators with the most competitive price offers will be selected, but payments for power volumes will still be made based on price levels set in earlier signed power purchase agreements.

Acknowledging the possibility of this, ERAV’s Electricity Price and Fee Department head Tran Tue Quang said no guiding document was in place to effectively control negative phenomena.

Vinacomin’s Power Holding Corporation deputy general director Pham Hong Khanh assumed a host of problems would arise when competitive power market was brought online despite the presence of a wide variety of relevant legal documents. Therefore, competent state agencies should be proactive in issuing suitable guiding decrees to ensure the market’s smooth performance, Khanh said.