The Ministry of Energy and Mines (MEM) is exploring changes to electricity prices for the 2024-2028 period to ensure the long-term sustainability of electricity generation and supply.
On August 29, Phosay Sayasone, chaired a forum at Electricite du Laos (EDL) where officials discussed revising the electricity pricing framework to better align with the current energy distribution situation.
The energy ministry provided data showing that from 2013 to 2019, the average electricity rate was USD 0.085 per kWh, with rates for mining operations ranging from USD 0.10 to USD 0.12 per kWh. However, due to the depreciation of the Lao kip against the US dollar and Thai baht, these rates effectively fell from USD .0173 to USD .049 per kWh, causing substantial losses for EDL and threatening the company’s financial viability.
To address this, a taskforce appointed by the MEM has proposed two potential solutions. First, a single rate with a discount for low usage structure imposes a flat rate for electricity usage and provides a 50 percent discount for consumers using less than 150 kWh per month. Second, a progressive pricing structure (telescoping), maintains the current tiered pricing model where the rate increases with higher consumption.
These proposed adjustments also need to account for fluctuations in currency exchange rates, as EDL pays for electricity in foreign currency for power generated in Laos and neighboring countries. Adjustments in charges are essential to ensure the company’s financial health and stability of Laos’ electricity supply.
The taskforce’s study suggests that while restructuring charges could alleviate financial pressure on EDL, it may not entirely prevent further losses. Therefore, the non-telescoping system is recommended for its ease of implementation, particularly in billing, and its advantage for consumers using less than 150 kWh per month.
According to 2023 statistics, 76 percent of households consume 150 kWh or less per month, and under the proposed rate structure, these households would be charged USD .0379 per kWh. Households consuming more than 150 kWh, which make up 24 percent of all households, would pay USD .0759 per kWh.
Additionally, the taskforce proposed introducing a 1.2 cent per kWh transmission fee for all customers. This fee, listed separately on electricity bills and exempt from value-added tax as per the concession agreement, aims to further support EDL’s financial stability.
The proposed price changes are a key part of a larger strategy to ensure the energy sector’s health and resilience, and these changes will only be enacted after government approval.
