Basis for considering options to adjust average retail electricity prices

The Ministry of Industry and Trade has just issued a document requesting Vietnam Electricity Group - EVN to develop a plan for average retail electricity price associated with retail electricity price management, implementing Decision No. 24 of the Prime Minister on the mechanism for adjusting average retail electricity price.

Accordingly, EVN is required to complete the report on the final settlement of electricity production and business costs in 2023, the 2023 financial report of the parent company - EVN and its member units. The above reports must all be independently audited by reputable units, before being sent to the Ministry of Industry and Trade for inspection and public announcement.

Based on the inspection results, EVN calculates the average retail electricity price plan for 2024 to report to competent authorities.

According to the Ministry of Industry and Trade, electricity prices need to be built on the basis of the national power supply and operation plan for 2024, and electricity production and business costs in 2022 and 2023.

The estimated costs for 2024 in all stages of power generation, transmission, distribution and retail, industry management and operation, and power system ancillary services... must be calculated correctly and fully.

In particular, costs related to the exchange rate difference in the power purchase contract but not yet calculated and paid in the 2024 price plan are also required to be considered as one of the electricity cost costs.

At the Price Steering Committee meeting in early 2024, the Ministry of Industry and Trade proposed adjusting electricity prices this year to reflect fluctuations in input costs and help EVN have resources to pay investors of power plants.

Associate Professor Dr. Phan The Cong (University of Commerce) said that the pressure to increase production costs and selling prices of goods is still being affected by last year's electricity price adjustment.

Besides, he said that the demand for electricity continues to increase due to extreme weather, pushing up the household electricity price index and creating quite a lot of pressure on inflation.

Therefore, management agencies need to calculate the appropriate dosage and adjustment time to ensure the interests of the State, businesses and people.

Prof. Dr. Vo Dai Luoc - former Director of the Institute of Economics and Politics told Lao Dong that increasing electricity prices is necessary to compensate for losses, but EVN needs to be open and transparent in electricity purchase and sale prices and business results so as not to affect people's psychology.

Regarding the increase in electricity prices, according to Professor Vo Dai Luoc, the increase in electricity prices should be under 5% and is under the authority of EVN to adjust. This increase is just enough for EVN to resolve the accumulated losses while avoiding widespread impacts on the people.

Regarding the timing of the electricity price increase, Mr. Luoc said that the electricity price should absolutely not be increased during the hot season (from May to July) to avoid shocking electricity bills, causing frustration for customers, so the electricity price should be increased in October this year.

In 2023, the average retail electricity price increased by 7.5% to VND2,092.78/kWh, after being adjusted twice by the management agency in May and November.

The mechanism for adjusting retail electricity prices is following Decision 24/2017, in which the time between two adjustments is 6 months if reviewing and checking input costs causes prices to increase by 3% or more.

Source