Renovating the View of Cost Sharing for the Underground Low Voltage Cable Projects in Hanoi

Therefore, to get right progress and successful from undergrouding low voltage cable projects and to implement these proejcts in time at urban areas and big citi[r]

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42

Original Article

Pham Thi Thu Ha1,*, Phan Dieu Huong2 1

Department of Industrial Economics, School of Economics and Management,

Hanoi Univeristy of Sciense and Technology, No 1, Dai Co Viet, Hai Ba Trung, Hanoi, Vietnam

2Department of Industrial Economics, School of Economics and Management,

Hanoi Univeristy of Sciense and Technology, No 1, Dai Co Viet, Hai Ba Trung, Hanoi, Vietnam Received 03 December 2019

Revised 26 December 2019; Accepted 26 December 2019

Abstract: Underground power grid projects in Hanoi is so urgent that it requires immediate

implementation To synchronously and quickly implement the underground power grid projects, people in charge should not follow the outdated perspectives of just including the power industry, but also need to call for the support and cost sharing responsibility from consumers This paper aims at approaching the subject both from the producers and consumers’ perspectives to together sharing the cost of putting the power grid underground not only in Hanoi but other metropolitans in Vietnam as well Field studies (including 104 families) at Hoan Kiem District, Hanoi and CBA method were applied to investigate the willingness to pay (WTP) level of consumers to share the cost with the power industry for the underground power grid projects in Hanoi The overview of the results shows that cost for the underground power grid in Hoan Kiem District ranging from 30,000 VND/household/month to 46,000VND/household/month On the other hand, the willingness to pay of a typical household of four people within Hoan Kiem District ranges from 17,000VND/month to 24,000VND/month, with the most favorable method of annual payment within a detailed timeline

Keywords: Underground low voltage cables, approaching from both sides, cost sharing, Hoan Kiem District, Hanoi

1 Introduction *

The point of view about undergrounding telecomunication cables, low voltage cables, _

* Corresponding author

E-mail address: ha.phamthithu@gmail.com https://doi.org/10.25073/2588-1108/vnueab.4295

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weight and complilcated of bunches of power cable grids that makes dangerous for people when they joint into transpotation, and especially in the rainny and flood season

From EVN Vietnam as well as Electricity Companies, they have detail plans for undergrouding low and medium voltage cables project steps by steps in big cities such as Hanoi [5], Khanh Hoa [8], Hochiminh City From the secondary data, almost underground electricity cables projects have been implemented that were agreed by customers who live around this place, and it was being tidy, clean space in city, especialy, it is more safety for public transportation and operating power in city However, there are some hurdles are existed during implement these projects that affects to customers’s daily living, while in some streets in Hanoi and Hochiminh City the projects have not been implemented completely

Therefore, what are difficulties needed to solve from the role of Department of Electricity and from the customers in big cities like Hanoi, Hochiminh City to force the progress of undergrouding low voltage cable projects and create a new image for Department of Electricity together with massive urbaniation as hopes of all stakeholders Furthemore, it is needed to change the awareness about social benefits and responsibilities of enterpreneurs and it is needed to hand on of all parties to support for public projects with the highest aim is innovating sustainable living standard in present as well as in the future

2 Change the awareness about methodology to approach benefits of public projects

There is so much changes in the opinion to run electricity business and to service customers, and it catches up the awareness of developement about high quality as severvice sector However, in so many projects, the Department of Electricity is still “to act single-handed” even all projecs are focusing on social goals Moreover, Department of Electricity has

done good job of undergrouding low voltage cable projects in some urban areas and big cities; but, while the Department of Electricity has to pay to invest for these projects, they still have to face with these negative responses form customers who are living at these areas even they get benefits directly

Therefore, to get right progress and successful from undergrouding low voltage cable projects and to implement these proejcts in time at urban areas and big cities, it is not only needed to change the awareness of Department of Electricity, but also need to have a methodology to approach stakeholders who are both Department of Electricity as well as customers who are living in urban areas and big cities The rights and obligations of Department of Electricity from undergrounding low voltage cable projects are the benefits and responsibilites of customers to support for implementing these projects successfully And it is needed to find out the same voice between the side of services suppliers and the side of customers, and the understanding from both stakeholders who get benefits from these projects Moreover, the deep understand and support of each stakeholders will lead to less pressure about finance problems when running these projects, and customers also aware the needed of their supporting for developing electricity sector as well as they are willing to pay for electricity expenses, beside that they not get problems of “must pay” and intransparent of electicity expenses

The detail solutions to approach electricity sector in the underground low voltage cable projects in urban areas and big citis are not only projects belong to Department of Electricity but also is costing electricity tuition from customers who live in these areas However, this approach is only successful when we persuade customers to agree and accept benefits from these proejcts because of they are not considered as the underground cables of telecommuinication projects before

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Department of Electricity and customers who are living in Hoan Kiem District, Hanoi to get evidences for demontrating detail of solutions as well as to deeply understand these difficulties of each parties that are needed to solve when these projects are running

3 The case study of undergrounding low voltage cable projects at Hoan Kiem District, Hanoi

The undergrounding low voltage cable project on streets at Hoan Kiem District, Hanoi was selected as a case study in this paper We have chosen this place as an experimental research because it is a district at center of Hanoi, and especially there are old quarter streets where customers run their business for years Moreover, this place is difficult to implement underground low voltage cables because there are so many houses, flats and building that located on narrows streets as well as small pavement, and particularly it is always crowded of not only local customers but also foreign tourists An experiemental research of undergrounding low voltage cable on streets around Hoan Kiem District will be the case study to be applied on other internal streets around Hanoi

The cost of undergrouding low voltage cable projects is related to cost of surplus investment and the cost of O&M directly, and it is not need to concern on other flexible expenses that could be changed not much in operating the low voltage grids in case of hanging on power poles and underground cables The primary data of this project is presented in Table

Table The input data of undergrounding low voltage on streets at Hoan Kiem District

Criteria Unit Results

Total investment Million VND 14264.00 Life of project Annual 20 The ratio of

discount

% 10

O&M cost %

Quality Electricity Annual

Million kWh 35.54 The number of

households on streets

Household 4413

Source: Hoan Kiem Electricity Company, Hanoi Electricty Company

In the context of Department of Electricity, the cost will be calculated by annual and it is measuared for changing factors such as total investment, life of project, the ratio of discount, the density of population The results was analysis and presented in part 3.1 of this paper

Approaching the potential of accepting to pay for undergrounding low voltage cable project from the side of customers who are living in Hoan Kiem District, we have chosen the size of sample is 150 households to collect data Finally, we have just collected data of 104 households, and we will use this data to analysis and evaluate potential and responsible of accepting to pay more cost for undergrounding low voltage cables of customers who live at Hoan Kiem District

The results of survey and analysis about approaching customers who are living at Hoan Kiem District will be shown specifically on the part 3.2 of this paper

3.1 Approaching from department of electricity The total expenses per year for undergrounding low voltage cables on streets around Hoan Kiem District will be concluded the cost of investment and O&M cost annual, and the results is provided on Table

Table The total expenses per year for undergrounding low voltage cables on streets in

Hoan Kiem District

Criteria Unit Results

The investment cost per year

Million VND 1675.44 The O&M cost

per year

Million VND 142.64 Total cost per

year

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The average cost for 1kWh

VND/kWh 51.15

The Average cost for household/monht

Thousand

VND/household/month 34.33

Sources: Aurthor’s Calculated

It has been seen from the point of view of Department of Electricity, when implementing undergroud low voltage cable project they will get pressure of increasing cost of investment This is not small amount when applying to underground low voltage cables in all streets at big cites Moreover, the other rasing cost is not concerned on such as the traffic jam, affecting on business of customers who are living on these streets when the projects is implemented Besides, it is difficult to evaluate raising cost, and it could be changed a lot if the low voltage cables is long and keep through many different streets However, it is needed to study more adequate in the context of social-economic

The total expense per year as well as average cost per 1kWh, the average expense per household/month will be changed when the input sources changed The results of analysis about changing of average cost per household/month is provided on Table

Table The average cost per household in case of undergrounding low voltage cables at Hoan

Kiem District

Unit: Thousand VND/household/month

Change of total investment to compare with primary plans

Primary plans

2% 5% 10% 15%

34.33 35.02 36.05 37.77 39.48 Change of life of project to compare with primary projects

Primary plans

-10% -20% -30% -50% 34.33 35.54 37.12 39.26 46.53 Change of population density to compare with primary plans

Primary plans

2% 5% 10% 15%

34.33 33.66 32.70 32.21 29.85 Change of ratio of discount to compare with primary plans

Primary plans

10% 20% 30% 50%

34.33 36.52 38.75 41.04 45.73

The results shows that when the total investment and the ratio of discount are increased or the life of project decreased will lead to risen the average cost of electricity per household per month to compare with primary plans In contrast, when population density is creased at place where the underground low voltage cables was implemented will lead to decrease the average cost of electricity per household per month to compare with primary plans Besides, there is an important factor that affects to arverage cost of electricity per 1kWh of underground low voltage cables is the quality of power However, there is any evidences that provides a benchmark about fluctuating of this factor, therefore we assume that the quality of power is stable in case of undergrouding low voltage cables Thus, the measurment about average cost of electricity for household in Hoan Kiem District will be fluctuated from VND30,000 per household per month to VND46,000 per household per month

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Therefore, the average cost of electricity is calculated for one household per month in the undergroud low voltage cables in streets around Hoan Kiem District in Table and will be decreased as the level of acceptance about cost sharing of customers who live in these streets In reality, there is any Precedents or Regulars

about the ratio of cost sharing to reference Thus, we will provide levels to define the fluctuated threshold when the ratio of cost sharing is different The table presents results of changing average cost of electricity per one household/month in the underground low voltage cables

Table The average cost of electricity for one household per month in the underground low voltage cables at Hoan Kiem District

Average cost of electricity per household/ month (Thousand VND/household/month)

Solution of the sharing cost in underground low voltage cables project between Department of Electricity and Customers

Primary ratio 90/10 80/20 70/30 60/40 50/50

34.0 3.4 6.8 10.2 13.6 17.0

Obviously, from the side of electricity sector, if the customers accept sharing about 90%, the average cost of electricity for one household per month, it will be only increased about VND30,000 per month, on the other hand, it is increased one day of using electricity per month respectively (about 20kWh at the firt level of 50kWh) At low levels of sharing cost, the changing of electricity cost per household is not much (the lowest level of sharing cost is 10% will lead to increase about VND3,400 per household/month, the level of sharing cost is 50% will be VND17,000 per household/month respectively) If customers accept to share at level of 10%, it will be saved VND1.55 billion for each streets, and this cost is not small one, and it is valuable to develop other needed projects to supply for life living or to upgrade the quality of power as well as the safety and integrity in providing electricity from underground low voltage cables

The important thing is how customers feedback for this approach while there is no one has concerned on projects of Department of Electricity even these projects leads to benefits for each households The answers will be provided through survey to get feedbacks of customers who are living on streets around Hoan Kiem District about underground low voltage cable projects and the approaching to

share cost as the levels of acceptance to pay from the side of customer

3.2 Approaching from customers side

To get feedbacks from customers who are living on streets where the underground low voltage cables are implemented at Hoan Kiem District, we have studied the sample of 150 households and get the data of 104 households completely Therefore, the results will be focused on data of these 104 households The questionnair was designed as two main parts: (i) general information about demographic and livelihood of households, (ii) the information that are relevant to feedbacks of customers about underground low voltage cables and the potential of acceptance as well as the level of paying for increasing cost when this project is implemented

The descriptive information of surveyed households:

- There are 104 households, the customers who have answered questionnairs are household owner (100% are male)1, the number of people

in each household are often people/household (the minimum is people/household and maximum is people/household)

- The education levels are college, univerity, and post graduate (100%)

_

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- The average income of one household is under VND30 million per month

The data of using electricity, average cost of electricity and income of each household per month is provided in Table

Table Using electricity, expense of electricity and average income of serveyed household

Number of households (household)

Ratio (%)

Number of people per household

(people/household)

2 people 8.65

4 people 49 47.12

5 people 33 31.73

6 people 13 12.50

Using electricity (kWh/month)

Under 200 0.96

From 200 - 400 2.89

Over 400 100 96.15

Expense of Electricity (VND thousand/month

Under 500 0.96

From 500 - 1000 19 18.27 From 1000 - 2000 81 77.88

Over 2000 2.89

Average income per

month (VND

million/month)

Under 20 21 20.19

From 20 - 30 68 65.38

Number of households (household)

Ratio (%)

Over 30 15 14.43

The results shows that these factors are age, education levels, occupations impact sharply to awareness of all stakeholders about the underground low voltage cables, and especially these households who have paid much for using electricity have concerned on the increasing expense than the other ones Therefore, the consideration on benefits of undergrounding low voltage cables as well as the potential of willing to pay for increasing expense and other payments will be different among households

We evaluated feedbacks from customers who had awareness of benefíts from underground low voltage cables on streets around Hoan Kiem District To estimate the agreement levels about benefits of these projects, we used Likert’s point from to 5, in which is definitely disagreement and is definitely agreement (2 is disagree, is not given, is agreement) The results of anlysis about feedbacks of customers who have participated in this survey is presneted in Table

Table Awareness of customers about the benefits of undergrouding low voltage cables at Hoan Kiem District

Criteria N Range Minimum Maximum Mean Std.Deviation Variance

Benefits of underground low voltage cables

104 3.00 2.00 5.00 3.72 0.85 0.72

Art look for urban areas 104 3.00 2.00 5.00 3.66 0.81 0.67

Safety for transportation 104 3.00 2.00 5.00 3.56 0.80 0.65

Safety for electricity grids 104 3.00 2.00 5.00 3.52 0.76 0.58

Decreasing traffic jam 104 3.00 2.00 5.00 3.50 0.72 0.52

Increasing house price 104 3.00 2.00 5.00 3.48 0.73 0.54

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The information in Table firgures out the awareness of customers about benefits of projects (the average point is 3.72 means that the level of agreement of customers is quite high) Obviously, the direct benefits from these projects is the safety in operating and supplying power that is known by customers and they have accepted over 3.4 point and there is not 1.0 point (the lowest level about increasing the price of house where there is underground low voltage cables is 3.48 point and the highest level is 3.66 point about creating art look for urban areas) Besides, these factors about increasing house price, creating potential for travel and tourists and decreasing traffic jam are less concerned

The factor of creating art look for urban areas was known first because the image of complicating, overlapping, weighted, dirty, and dangerous electricity cables was evil and made people at these urban areas felt uncomfortable In long time, urban people wanted to change electricity cables, they also wanted to innovate their living environment but they could not solve these problems In the past, Department of Electricity has not concerned on these projects and they also have not got enough conditions to implement unifined projects of underground low voltage cables, infrastructure, underground telecomunicaton cables, and water pipes Therefore, customers have had positive responses for underground low voltage cables

projects that is corresponded with the survey results

Furthermore, these factors about increasing price of houses, potential of travelling and tourism, or decreasing traffic jam are still not studied deeply Therefore, they are evaluated less than the factor of creating art look for urban areas In addtion, some customers have supposed that these underground low voltage cables will lead to lower price of houses because of changing electricity poles by electricity boxes that are existed closely in front of houses And this is also the probems of customers who are living on some streets in Hanoi where these projects have been done [4]

When customers have awareness about benefits of underground low voltage cables, they will support more for Department of Electricity to implement these projects Obviously, change the awareness of customers by being proactive in constructing, innovating, enhencing quality of living environment; not waiting, and be not passive element in public projects Once customers understand [5], [8] about right and obligations of underground low voltage cables, they will support and accept easily for difficulties of implementing these projects The results about potential of accepting to pay for sharing added cost with Department of Electricity as well as the cost that customers could pay are provided in Table 72

Table The potential of willing to pay for cost of undergrounding low voltage cables at Hoan Kiem District2

Criteria N Range Minimum Maximum Mean Std.Deviation

Accepting to pay for added cost 104 4.00 1.00 5.00 3.24 0.88

The level of accepting to pay for added cost

104 4.00 1.00 5.00 3.24 0.52

Lower than cleaning fee (<VND6000/person/month)

36 4.00 1.00 5.00 3.22 0.90

Equivalent cleaning fee (= VND6000/person/month)

57 4.00 1.00 5.00 3.26 0.92

Higher than cleaning fee(>VND6000/person/month)

11 2.00 2.00 4.00 3.18 0.75

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Criteria N Range Minimum Maximum Mean Std.Deviation

Period of collecting money 104 4.00 1.00 5.00 3.24 0.89

Monthly 19 4.00 1.00 5.00 3.32 1.00

Quarterly 73 4.00 1.00 5.00 3.15 0.88

Annual 12 2.00 3.00 5.00 4.00 0.74

How to calculate cost 104 4.00 1.00 5.00 3.77 1.17

Calculating as electricity used 27 4.00 1.00 5.00 2.89 0.89

Calculating as number of people per household

50 4.00 1.00 5.00 4.38 1.28

Calculating as investment cost 27 4.00 1.00 5.00 3.52 1.19 Sources: Aurthor’s Calculated

The results on table shows that the factor of willing to pay for added cost when underground low voltage cables are implemented on streets around Hoan Kiem District is not high (the average point is 3.24/5.0), however, the quantity of agreements is higher than disagreement or definitely agreement Thus, customers have understood benefits of these projects and they also thinking positively of innovating living environment that relevants to society

With regard to feedbacks of customers about levels of cost, period to collect money and how to calculate cost for undergrounding low voltage cables are positively corresponded with attitude of willing to pay However, even almost factors are over 3.0/5.0 (except the factor of how to calculate cost is lowest point with 2.89/5.0) Almost customers can pay for added cost that equivalent cleaning fee (about VND6000/person/month, it is estimated respectively about VND24,000/4 customers/month, it is increased about 1.7% to compare with current monthly average cost of electricity of each household) The factor of period to collect money is highest point at (4.0/5.0) and the method to calculate cost by the number of customers per household (as the cleaning fee that is applied for urban areas) also get high point at 4.38/5.0

Furthermore, customers want to know the transparent of cost distribution, clearly period to collect money and the level of cost will be stable during informing time The results also shows that there are some hurdles about potential of willing to share cost of projects as

well as awareness of responsibilities for underground low voltage cables that are belong to Department of Electricity, or customers not need to pay for any cost and these projects must be implemented as the development trend Moreover, some of them supposed that this cost has been not used reasonable as well as the period to collect money not suitable that will lead to added cost on electricity bill of customers Obviously, these worries are right, but to deal with these problem we need the detail of analysis and a clear plan from Department of Electricity

Finally, both of Department of Electricity and customers will have the same voice about underground low voltage cables in Hoan Kiem District as well as in other big cities? The answers will be presented at part 3.3 as the results of approaching two stakeholders that are Department of Electricity (cost) and customers (the level of willing to pay)

3.3 Changing awareness to develop together Regarding to approaching from both Department of Electricity and customers who are living on streets where these underground low voltage cables are implemented, there is not any researches before to reference However, to develop, innovating environment positively and proactively, it is needed customers participate in these projects

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trend of implement infrastructure projects in developed countries

From the customers role, they have had awareness clearly about benefits from underground low voltage cables, and most of them willing to pay for added cost to share pressure with Department of Electricity to change their living environment for better life The level of cost equivalents to cleaning fee (about VND6000/person/month, respectively

for customers is

VND24,000/household/month), and the period to collect money is annual (there is detail schedule) and with this level of cost the ratio sharing will be 70/30; and if the level of cost is lower cleaning fee, the ratio sharing will bee 60/40 and it is VND13,600/household/month; the ratio sharing is 50/50 corresponds to level of cost is VND17,000 household/month

The changing awareness of stakeholders in underground low voltage cables at urban areas will be the first steps for customers participate and make decisions to encourage public projects are implemented soon However, when this approach is applied, it is needed to communicate about benefits of public projects and the right as well as obligations of all stakehoulders who participate in investing and implementing these projects Besides, it is also needed to provide the detail plan and progress to implement public projects quickly and not impact to living activities of customers who are living on those streets during active times Acctually, the problems of underground low voltage cables is not only financial term [8] but also is the transparent in cost management for these projects [9]

4 Conclusion

To implement underground low voltage cables in right progress in big cities, it is needed to cooperate between organizations and stakeholders as well as the supporting from Government side for these projects

With regard to constructing organizations, it is required to intergrated management of quality, detail implement progress, cleaning environment and safety for transports to avoid troubles for customers’s living in these streets where underground low voltage cables are implemented

Finally, to get payment for these projects, it is needed to have detail analysis of solutions and plan to implement underground low voltage cables steps by steps The Departement of Electricity should provide a plan of developing electricity grids in the future, and focasting performance of operating electricity for constructing technical trails to develop underground low voltage cables The oppinions that approaching sharing cost with customers should be officially to avoid lacking transparent in collecting and distributing cost of projects

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