Latest proposal of Ministry of Industry and Trade on increasing and decreasing electricity price

The Ministry of Industry and Trade has just sent a report to Deputy Prime Minister Bui Thanh Son on the draft Decree regulating the mechanism and time for adjusting average retail electricity prices.

In the completed draft sent to the Deputy Prime Minister , the Ministry of Industry and Trade has sought additional opinions from the State Bank regarding the average interbank interest rate for a 6-month period as a basis for calculating the standard profit level for the electricity industry.

When will electricity prices be adjusted up or down?

Regarding the principle of adjusting the average retail electricity price, every year, after Vietnam Electricity Group (EVN) publicly announces the cost of electricity production and business in year N-2, the average retail electricity price is considered and adjusted based on the updated cost of electricity generation, the cost of purchasing electricity from power plants providing ancillary services according to basic input parameters in the electricity generation stage and other costs not included in the electricity price.

This cost will also include EVN's annual standard profit calculated based on the stages of electricity distribution, retail, industry operation and management, multi-purpose strategic hydropower plants and other dependent accounting power plants during the period when EVN has not participated in the competitive electricity market.

In addition, the after-tax profit margin on equity will not be lower than the average daily 6-month interbank interest rate announced by the State Bank.

Accordingly, when the average retail electricity price decreases by 1% or more compared to the current average retail electricity price, the electricity price is allowed to be adjusted down accordingly.

When the average retail electricity price increases by 2% or more compared to the current average retail electricity price, the electricity price is allowed to be adjusted upward.

In case the calculated average retail electricity price is outside the price range, it can only be considered for adjustment within the price range prescribed by the Prime Minister. EVN is allowed to increase or decrease the average retail electricity price within the price range.

In case the average retail electricity price needs to be adjusted to be 10% or higher than the current average retail electricity price, the Ministry of Industry and Trade shall preside over and coordinate with relevant ministries and agencies to inspect, review and report to the Government for consideration and comments. If necessary, the Ministry of Industry and Trade shall coordinate with relevant ministries and agencies to report to the Price Management Steering Committee before reporting to the Government.

The draft clearly states that the adjustment of average retail electricity prices must be carried out publicly and transparently.

Proposal to adjust electricity prices once every 3 months

After having a basis for calculation, if the average retail electricity price decreases by 1% or more compared to the current retail price, EVN is responsible for reducing the selling price at the corresponding level and preparing a report to EVN for inspection and supervision.

If the average retail electricity price increases from 2% to less than 5% compared to the current price, EVN will prepare a plan for the average retail electricity price and report to the Ministry of Industry and Trade for inspection, review and comments. This level is lower than the current 3% regulation.

Regarding this proposal, the Ministry of Industry and Trade previously said that in order to ease the situation for EVN, at the level of electricity price adjustment below 5%, EVN has the right to decide on its own and after the adjustment, it will report to the Ministry of Industry and Trade to preside over and coordinate with relevant ministries and agencies for supervision. However, EVN later proposed to add that the unit decides to adjust the average electricity price to the corresponding level after reporting and receiving comments from the Ministry of Industry and Trade.

This means that although the provision has been removed and EVN has been given autonomy in adjusting electricity prices below 5%, EVN is still cautious and needs the opinion of a competent state agency before deciding to increase the price below 5%. Therefore, the draft has added that EVN prepares a dossier on the average retail electricity price plan and reports to the Ministry of Industry and Trade for review and comments.

With an increase of 5% or more to less than 10%, EVN is allowed to adjust the price accordingly after reporting to the Ministry of Industry and Trade and getting approval. With an average retail electricity price increase of 10% or more, based on the electricity price plan submitted by EVN, the Ministry of Industry and Trade will preside over the inspection, review and send it to relevant ministries and agencies for comments.

Based on the comments of relevant ministries and agencies, the Ministry of Industry and Trade will synthesize and report to the Government for consideration and comments. If necessary, the Ministry of Industry and Trade will coordinate with relevant ministries and agencies to report to the Price Management Steering Committee before reporting to the Government.

Regarding the time to adjust the average retail electricity price, previously, the Ministry of Industry and Trade proposed to shorten the time to adjust the average retail electricity price to a minimum of 2 months from the most recent change, a reduction of 1 month compared to current regulations.

However, the Ministry of Industry and Trade later withdrew this proposal, instead keeping it as the current regulation with a minimum adjustment period of 3 months from the most recent electricity price adjustment.

(According to PLO)

Source: https://baoyenbai.com.vn/12/347908/De-xuat-moi-nhat-cua-Bo-Cong-Thuong-ve-tang-giam-gia-dien.aspx