Consumers brace for power rates

The Hanoi Times - Domestic customers will turn off the lights and take less hot showers to cope with power price hikes scheduled for next month, but businesses won’t find it so easy to save o­n the job or absorb the costs.A boarding house manager in My Dinh Zone, Tu Liem district, who introduced herself as Le Thi Ban, said she had asked her tenants to reduce electricity use to counter the new price.  Ban said she had learnt of the pending increase for some months but that would not dampen the impact when it finally came into force.  But Ban said this was not a big worry for her because she had the income from rent, but she was very concerned about her tenants, as most of them were students and had to pay about 10 percent more o­n the fee.  Ban said that she and her tenants had considered changing neon lights into compact lights to save electricity.  The new market-based electricity rates are to take effect o­n March 1 when retail prices, excluding value added tax, will average VND948.5/kWh, up 8.92 percent over last year. This has caused concern to others residents in the city.  Housewife Nguyen Thi Vinh, in Hanoi’s Nam Dong Ward, said she was not worried about the increase because she could cut down o­n the use of electricity. Her main concern was that power price increase would have ripple effects o­n other commodities.  “No o­ne can be sure that water, food and goods won’t rise following the increase,” Vinh said, recalling 2007 when prices increased across the board o­n the back of an electricity price hike.  There was a mixed message from the business community. Truong Thanh Tung, director of a business in HCM City’s District 8, said although electricity accounted for o­nly 0.05 percent of production expenses, with orders shrinking and the price of materials soaring, the increasing electricity bill would put a greater burden o­n enterprises.  However, leaders of Ha Tien No 1 Cement Company, Binh Minh Joint Stock Company and Tan Binh Electronics Company said they had no choice but to accept it. Most businesses wished Electricity of Vietnam should ensure continuous power distribution and reduce power cuts so enterprises could do business efficiently, boost production and increase profits to pay for power consumption. They asked electricity companies to inform their customers five days before a power cut, so that they could manage to overcome the problem. The Ministry of Industry and Trade has calculated that producer industries would have to pay a total of VND2.3 trillion more for electricity while an additional VND300 billion would fill the bill of the administrative sector. Officials calculated that ordinary people had to pay VND2,500 to VND32,000 (US$0.14-US$1.8) more per month for their consumption of 50-400kWh. Responding to the prediction of ripple effects of 3 percent increase to other commodities, HCM City Industry and Trade Department director Nguyen Van Lai said his department would strengthen its surveillance of customers and providers. Violators who tried to increase prices following the power hike would have to answer to the department. Deputy Prime Minister Hoang Trung Hai said the electricity price increase was a buffer for change next year when the electricity price would be allowed to fluctuate with the market. Furthermore, its was logical that the electricity industry should keep pace with other industries, he said.