Vietnam Plans to End Electricity Cross-Subsidies, With Calls to Protect Households

Electricity reform puts household bills and investment risks in focus

Vietnam presented proposed Electricity Law amendments to the National Assembly on October 20, 2026, seeking a gradual end to cross-subsidies between customer groups while creating clearer rules for financing new power plants and transmission lines. Lawmakers asked the Government to specify who would face higher costs, how vulnerable households would receive support and which investment risks electricity users would be expected to share.

Minister of Industry and Trade Le Manh Hung introduced the bill on behalf of the Prime Minister at the second session of the 16th National Assembly. The Government's October 20 statement says difficulties implementing the adjusted Power Development Plan VIII and preparing electricity supply for 2027 to 2030 exposed obstacles in planning, renewable energy investment and pricing.

The proposal would amend Electricity Law No. 61/2024/QH15, which took effect on February 1, 2025. Alongside tariff reform, it would expand direct electricity trading, use winning tender prices as the basis for power purchase contracts and permit investment in transmission grids through public-private partnerships.

Nguyen Thanh Hai, chairwoman of the National Assembly's Committee on Science, Technology and Environment, said the review committee broadly supported reform. Its central demand was that electricity prices reflect reasonable, valid costs, investment efficiency and market conditions, with clear responsibilities for investors, electricity buyers and the State.

For families and businesses, the immediate issue is how future charges would be calculated. The timetable for ending cross-subsidies, the resulting changes in individual bills and the final funding arrangements for assistance remained to be specified. The Government described a phased transition rather than an immediate switch.

What ending cross-subsidies would change

Cross-subsidies occur when the prices charged to one group of electricity users help cover the cost of supplying another. Removing them gradually would move charges closer to the cost of serving each group, changing how the electricity system's expenses are shared.

The existing Electricity Law already sets a direction of reducing and eventually eliminating cross-subsidies between customer groups under Article 5. The new amendments seek to turn that principle into a more detailed roadmap, including for customers who have not yet entered a competitive retail electricity market.

The draft would retain State regulation while allowing prices to form through a market mechanism suited to the stage of electricity market development and national energy security needs. Competition would therefore operate within a regulated framework.

The review committee wants the Government to identify the groups covered, the stages of implementation and the effects on household and business bills. Some proposed provisions also address cross-subsidies between regions, making the cost of supplying remote communities an important part of the debate.

Direct assistance would need to reach people on time

Poor households, people eligible for social assistance and residents of areas facing exceptionally difficult socioeconomic conditions would need explicit protection as tariffs change. Lawmakers called for support with clear eligibility rules, funding and agencies responsible for delivery.

Hai Phong delegate Hoang Van Tuyen highlighted mountainous areas, remote communities and islands, where building and operating electricity networks often costs more while many households have limited incomes. He asked for assessments by customer group and region, alongside arrangements to maintain safe, stable electricity access at an affordable cost.

Tuyen also sought transition rules so existing recipients continue receiving help when tariffs or payment methods change. Changes in residence information or poverty status, combined with complicated verification procedures, could delay assistance for people far from administrative centres.

Another Hai Phong delegate, Vu Van Tien, said proposed Article 5(13) referred broadly to the State budget and other lawful financial sources or funds. He requested clearer rules for allocating, paying and accounting for electricity assistance. Da Nang delegate Nguyen Xuan Nghiem similarly urged the Government to coordinate tariff reform with social support so help arrives when bills change.

Hourly pricing meets the realities of family life

Draft Article 50 would provide a basis for household electricity prices that vary between peak, normal and off-peak hours when technical conditions permit. Such pricing gives customers a financial reason to move flexible electricity use away from periods when demand is highest.

Dien Bien delegate Ta Thi Yen cautioned against immediately applying the system to every household. A factory may be able to rearrange production shifts, she argued, while families have much less freedom to change the timing of dinner, children's study, bathing and other essential evening activities.

Yen proposed making eligibility depend on customer groups, consumption, the ability to shift demand, electricity meters and technical infrastructure. She also requested a roadmap and an assessment before wider application.

Hai Phong delegate Nguyen Thi Viet Nga called for scenarios showing the combined effects of hourly pricing and the removal of cross-subsidies. A household could experience both changes at once, so separate calculations would give an incomplete picture of its future bill.

The Vietnam Chamber of Commerce and Industry's conference account records Nga's requests for accurate metering, data and invoices customers can check, advance disclosure and support for vulnerable households. Deputy Industry and Trade Minister Truong Thanh Hoai said the Prime Minister would issue a roadmap for average retail electricity prices aimed at limiting disruption to daily life.

Which costs belong in electricity prices?

Draft Article 51 addresses power purchase contract prices, including recovery of investment, financing, operation, fuel and other reasonable, valid expenses, together with a reasonable profit. Those terms matter because a power project needs a credible prospect of earning enough revenue to attract financing.

The committee asked for tighter rules tying recoverable costs to investment efficiency, risk and market conditions. Yen and Nga sought an explicit division between costs electricity buyers should share and risks investors should bear, including responsibility for poor management or inefficient investment.

Nga, a National Assembly delegate representing Hai Phong, described the role of the Government's implementing rules at the September 28 conference:

The methods for calculating prices, profit margins, and specific procedures will be subject to detailed regulation by the Government. When drafting the decree, the Government needs to pay special attention to the mechanism for checking and auditing costs,

Cost inspections, audits and disclosure would give regulators a way to examine expenses before they reach customer bills. For investors, the same framework would identify which legitimate expenses can be recovered and which decisions remain their responsibility.

Who pays when retail price adjustments are delayed?

The draft allows a State mechanism to compensate reasonable costs when retail electricity prices cannot be adjusted promptly because of economic stability and social welfare objectives. This would address the financial gap that can emerge when supply costs rise while regulated prices are held steady.

Historical figures illustrate why the issue matters. Ministry of Industry and Trade figures for 2023 put average electricity costs at VND 2,088 per kilowatt-hour, compared with an average selling price of VND 1,953. The difference was VND 135 for each kilowatt-hour sold, showing how a gap between costs and revenue can accumulate across large sales volumes.

The review committee requested the source of compensation funds, the payment method and the timing for verifying and settling costs. National Assembly Vice Chairman Nguyen Hong Dien also asked for rules identifying who bears the expense, how it is recorded and audited, and how repayment would work.

Compensation for delayed tariff adjustments and assistance to vulnerable households would serve different purposes. The first addresses a gap in electricity supply revenue; the second helps eligible people afford essential consumption. Lawmakers want both to have defined funding and accountability.

Investors seek predictable revenue and faster decisions

Prime Minister Le Minh Hung told an October 20 group discussion that electricity demand from economic growth, technology investment and data centres required much greater investment. He said hydropower had reached its development limits and pointed to domestic gas, imported liquefied natural gas, wind, solar and offshore wind as sources requiring attention alongside Vietnam's commitment to net zero emissions by 2050.

The Prime Minister said investors had described administrative procedures for an offshore wind project taking as long as 10 years. Effective reform could reduce that to about five years, cutting the period in half before considering the time needed for construction.

Investors also raised concerns about earlier arrangements committing to purchase only about 65 percent of a project's capacity, as well as exchange rates and access to foreign currency over a project's life. These issues affect the certainty of revenue and the ability to repay loans obtained abroad.

At the September 28 conference, Can Tho delegate To Ai Vang proposed a mechanism for an appropriate minimum electricity output commitment over an extended period and rules linking fuel input prices to electricity selling prices in signed contracts. She also proposed a roadmap for an independent State electricity dispatch company under the Industry and Trade Ministry. Dispatch is the process of coordinating which plants supply the grid and when.

Faster approvals would come with demands for safeguards

The Government proposes allowing some electricity projects included in approved planning programmes to proceed without a separate investment policy approval. That procedure normally establishes approval for a project's basic investment approach before subsequent steps.

The proposed scope reaches beyond the transmission grid projects covered by National Assembly Resolution No. 253/2025/QH15. The committee asked for a clear legal basis for the extension and replacement controls covering land, forests, marine areas, environmental protection, investor capacity, defence and security.

Can Tho delegate Dao Chi Nghia sought more precise exemption conditions. Deputy Minister Hoai said projects involving security, defence or environmental matters would still require investment policy approval.

The bill would also make the winning electricity tender price the basis for a power purchase agreement, reducing repeated price negotiations after an investor wins. The committee requested a clear relationship between tender results, contract duration and subsequent negotiations.

The Government described substantive changes mainly affecting 27 articles and the repeal of three. Dien cited the review committee's broader count of amendments, replacements and repeals touching 49 of the existing law's 81 articles, or 60.5 percent. He urged attention to urgent, adequately assessed changes, given that the current law had been operating for less than two years.

Competition still needs someone to pay for the grid

Electricity retailers would become eligible for expanded direct power purchase arrangements under the draft. These arrangements allow qualifying buyers and sellers to contract directly, while electricity supply can still depend on shared networks and system services.

The committee wants participants to meet the full costs assigned to them for transmission, distribution, dispatch, reserve capacity and other system services. Reserve capacity is electricity generating capability kept available to help maintain supply when demand rises or other generation becomes unavailable.

Those rules matter for customers who remain outside direct trading. The committee requested transparent cost allocation so expanding participation does not shift an unreasonable share of network and operating expenses onto them. It also sought clear rights and responsibilities for retailers and rules for moving existing contracts through successive stages of market reform.

Public-private partnerships would bring private investment into transmission grids. Dien requested clear payment arrangements, investment recovery rules and a division of risks, including situations where a completed line is used less than expected because the power plants meant to supply it are delayed.

New energy rules extend from offshore surveys to dam safety

Offshore wind provisions would address survey work, project development and transfers of ownership or control. The committee asked who would own survey data, how confidentiality and survey expenses would be handled, what priority rights surveyors would receive and how deposits and marine area permissions would work.

Renewable energy certificates would receive a legal framework as electronic property rights representing the renewable attribute of electricity. The proposed certificate market would operate separately from electricity trading, with rules against counting the same renewable attribute more than once.

The draft also proposes private participation in small modular nuclear power, pricing incentives for renewable energy and storage, and provisions for electricity generated from waste. The committee requested workable rules, clear authority and safety requirements, including nuclear safety and protection of maritime security and sovereignty.

Hydroelectric dam safety provisions drew requests for a clear approval authority and coordination between provinces. Tuyen asked for responsibilities covering flood release warnings, data sharing, emergency exercises and timely information for communities upstream and downstream.

How the reform reached Parliament

The proposed roadmap builds on legislation passed in 2024 and subsequent discussions about implementation. The principal milestones are:

• November 30, 2024: The National Assembly approved the new Electricity Law with 91.65 percent support.
• February 1, 2025: Electricity Law No. 61/2024/QH15 took effect.
• September 28, 2026: Delegates at a specialised conference discussed cost controls, investor risks, hourly household pricing and cross-subsidies.
• October 20, 2026: The Government presented the amendment bill and the committee delivered its review at the second session of the 16th National Assembly.
• 2027 to 2030: Electricity supply requirements for this period form part of the Government's stated reason for seeking changes.

The next work identified by officials is to refine the draft and develop detailed roadmaps and implementing rules. Across the debate, lawmakers have connected three practical tasks: financing enough electricity infrastructure, assigning costs transparently and ensuring assistance reaches households as the pricing system changes.

Key Points

• Vietnam proposes gradually ending electricity cross-subsidies between customer groups under State regulation.
• Lawmakers want bill impact scenarios, clear eligibility for assistance and reliable funding for vulnerable households.
• Hourly household pricing would depend on technical conditions, with calls for a cautious rollout.
• Cost audits and explicit investor responsibilities are central demands in the parliamentary review.
• The draft would expand direct electricity trading, simplify some approvals and allow transmission investment through public-private partnerships.
• The final tariff timetable and detailed support arrangements still require specification.