New regulations on the mechanism to adjust the average electricity selling price in Vietnam in the year as of May 15, 2024

New regulations on the mechanism to adjust the average electricity selling price in Vietnam in the year as of May 15, 2024 (Internet image)

On March 26, 2024, the Prime Minister issued Decision 05/2024/QD-TTg regulating the mechanism for adjusting the average retail electricity price, taking effect on May 15, 2024.

New regulations on the mechanism to adjust the average electricity selling price in Vietnam in the year as of May 15, 2024

According to Article 5 of Decision 05/2024/QD-TTg, the mechanism for adjusting the average annual electricity price is as follows:

(1) Based on the plan for power supply and operation of the power system for year N issued by the Ministry of Industry and Trade; results of checking electricity production and business costs in year N-2 according to the provisions of Article 7 of Decision 05/2024/QD-TTg; estimated results of electricity production and business in year N-1 (in case there are no results of checking electricity production and business costs in year N-1), before January 25, year N, Vietnam Electricity (EVN) calculates the average electricity selling price according to the formula specified in Clause 2, Article 4, Decision 05/2024/QD-TTg and fulfills the request for documents according to regulations specified in (2):

- In case the calculated average electricity selling price decreases by 1% or more compared to the current average electricity selling price, EVN is responsible for reducing the average electricity selling price by a corresponding level. Within 05 working days from the date of adjustment, EVN is responsible for preparing documents to report to the Ministry of Industry and Trade to preside and coordinate with relevant ministries and agencies for inspection and supervision.

- In case the average electricity selling price needs to be adjusted to increase from 3% to less than 5% compared to the current average electricity selling price, EVN decides to adjust the average electricity selling price to a corresponding level. Within 05 working days from the date of making adjustments, EVN prepares documents to report to the Ministry of Industry and Trade to preside and coordinate with relevant ministries and agencies for inspection and supervision.

- In case the average electricity selling price needs to be adjusted to increase from 5% to less than 10% compared to the current average electricity selling price, EVN is allowed to adjust the average electricity price to a corresponding increase after reporting and being approved by the Ministry of Industry and Trade. Within 15 working days from the date of receiving the complete price plan dossier from EVN, the Ministry of Industry and Trade is responsible for responding in writing for EVN to implement. Within 05 working days from the date of making the adjustment, EVN is responsible for reporting to the Ministry of Industry and Trade.

- In case the average electricity selling price needs to be adjusted to increase by 10% or more compared to the current average electricity selling price or affects the macroeconomic situation, based on the electricity price plan dossier submitted by EVN, the Ministry of Industry and Trade shall be responsible for inspecting, reviewing, and seeking comments from the Ministry of Finance and relevant ministries and agencies. Based on comments from the Ministry of Finance and relevant ministries and agencies, the Ministry of Industry and Trade shall synthesize and report to the Prime Minister for consideration and comments. In cases of necessity, the Ministry of Industry and Trade coordinates with relevant ministries and agencies to report to the Price Management Steering Committee before reporting to the Prime Minister.

(2) Documentation of the annual average electricity selling price plan of EVN includes:

- Official dispatch reporting on the annual average electricity price plan of EVN, which includes analysis and assessment of electricity production and business costs at all stages;

- The contents attached to the Official Dispatch reporting on the annual average electricity selling price plan of EVN include: principles for calculating the cost of each stage (electricity generation, transmission, distribution - retail, electricity market trading operation and management, power system operation and control), including the expected input parameters such as exchange rates, domestic fuel prices, imported fuel prices, and the expected prices of power plants to be put into operation in the calculated year but without electricity purchase contracts; a summary table of the calculated results of the cost of each stage; a detailed table of the calculated data on the cost of each stage; documents used as the basis for calculation; explanations of cost standards and prices used in the expected cost calculation of each stage in year N (if any); a report evaluating the impact of electricity price adjustments on the electricity purchase cost of electricity users.

- All dossiers on the average electricity selling price plan are saved to the data storage device and enclosed with the report on the annual average electricity selling price plan of EVN.

More details can be found in Decision 05/2024/QD-TTg, taking effect on May 15, 2024, and replacing Decision 24/2017/QD-TTg.

Ho Quoc Tuan

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