Adding coordinating ministries
In the report sent, the Ministry of Industry and Trade stated that it has reviewed, thoroughly evaluated the draft and supplemented, amended the arising issues related to the operation of electricity prices in accordance with the authority, regulations of the law and working regulations of the Government.
Regarding regulated profits in electricity prices, the Ministry of Industry and Trade said that it will not implement specific regulations on determining regulated profits. The agency has also reviewed the regulations and suggestions of the Deputy Prime Minister, the Ministry of Finance. Accordingly, regarding the coordination and coordination in the operation of electricity prices, the Ministry of Industry and Trade is the leading agency responsible for checking and reviewing. The Ministry of Finance holds the responsibility of coordinating in terms of being the state management agency for prices.
Specifically, the Ministry of Industry and Trade will still be responsible to the Government for managing the state electricity sector, electricity use, including electricity prices. The Ministry of Industry and Trade will guide EVN on calculating average electricity selling prices, implementing electricity price adjustments, and being responsible for checking and supervising.
The Ministry of Industry and Trade maintains the proposal to adjust electricity prices once every three months
The Ministry of Industry and Trade also proposes that relevant ministries and agencies participate and coordinate with relevant contents, according to their functions and assigned tasks and regulations of the law.
To make the process of reviewing electricity price adjustments more transparent, the Ministry of Industry and Trade proposes to supplement the responsibility of the General Statistics Office in assessing the impact of electricity price adjustments on the macro economy. EVN will provide relevant data for this agency to have a statistical basis for assessment.
Maintaining the proposal to adjust electricity prices once every three months
In this draft, the Ministry of Industry and Trade still proposes that electricity prices be calculated with additional costs of capital that were not previously accounted for, such as exchange rate differences. The expected time for electricity price adjustment will be shortened from once every 6 months to once every 3 months.
That means there will be 4 periods of change each year and prices will be updated quarterly according to electricity generation costs.
The proposed average retail electricity prices will still increase or decrease within specific limits as in the previous draft. Accordingly, in cases where input parameters in stages such as power generation, transmission, distribution, etc. reduce the average selling price of electricity by more than 1% compared to the current average price, EVN is responsible for reducing the price accordingly. EVN will submit a report to the Ministry of Industry and Trade, Finance for inspection and supervision.
Conversely, when the average electricity price increases by 3% or more compared to the current price, EVN is allowed to increase the price. In case the average electricity price needs to be adjusted upwards by 10% or more compared to the current level, which affects the macro economy, the Ministry of Industry and Trade will lead the inspection, review, collect opinions of the Ministry of Finance and related agencies.
“When necessary, the Ministry of Industry and Trade will request EVN to hire independent consultants to verify the electricity production and business costs of the group and its subsidiaries,” the Ministry of Industry and Trade said. The ministry also proposes to maintain the term “including the unallocated re-evaluation exchange rate difference” as stipulated in Decision No. 24 of the Prime Minister to ensure the consideration of the exchange rate difference in the calculation of retail electricity prices.
In November 2023, when responding to the Ministry of Industry and Trade on feedback for the draft replacing the Prime Minister’s Decision 24/2017 on retail electricity prices, the Ministry of Finance cited the provisions of the Price Law, the Electricity Law to affirm that the Ministry of Industry and Trade is responsible to the Government for managing state electricity, electricity use, including electricity prices. That is, the Ministry of Industry and Trade is the leading agency to build a price framework, adjustment mechanism, retail electricity tariff schedule, and guide the establishment of power price framework, transmission, ancillary services, control fees, etc.
The Ministry of Finance also proposed not to regulate their coordination responsibilities in the draft Decision and remove the content “Vietnam Electricity (EVN) submits a report on electricity price plans to the Ministry of Finance”. Instead, the ministry only coordinates in cases of abnormal fluctuations or major impacts. If the average retail electricity price increases by 5-10%, the Ministry of Industry and Trade proactively reviews and gives opinions on the proposed plan of EVN. If the electricity price increases by 10% or more, affecting the macro economy, the Ministry of Finance will be one of the ministries and agencies to provide comments on the revised price plan of the Ministry of Industry and Trade.
The Ministry of Finance also believes that it is not responsible for checking the reports of EVN; not required to attend meetings, report and provide opinions on the annual electricity price plan. This ministry only gives opinions if the Ministry of Industry and Trade requests.
