Regulation on the mechanism of annual adjustments to average electricity selling prices in Vietnam as of May 15, 2024

Regulation on the mechanism of annual adjustments to average electricity selling prices in Vietnam as of May 15, 2024 (Internet image) 

Regarding this matter, LawNet would like to answer as follows: 

On March 26, 2024, the Prime Minister issued Decision 05/2024/QD-TTg regulating the mechanism of adjusting average retail electricity prices.

Regulation on the mechanism of annual adjustments to average electricity selling prices in Vietnam as of May 15, 2024

The mechanism of annual adjustments to average electricity selling prices in Vietnam as of May 15, 2024, will be implemented as follows:

(1) Based on the electricity supply plan and operation of the power system for year N issued by the Ministry of Industry and Trade and the 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 of Decision 05/2024/QD-TTg and implements the dossier requirements as prescribed in (2):.

- If the calculated average electricity selling price decreases by 1% or more compared to the current average electricity selling price, the EVN is responsible for reducing the average electricity selling price accordingly. Within 5 working days from the date of adjustment, the EVN should prepare a report to the Ministry of Industry and Trade for coordination and supervision with relevant ministries and agencies.

- In the event that the average electricity selling price needs to be adjusted to increase by 3% to less than 5% compared to the current average electricity selling price, the EVN decides to adjust the average electricity selling price accordingly. Within 5 working days from the date of adjustment, the EVN should prepare a report to the Ministry of Industry and Trade for coordination and supervision with relevant ministries and agencies.

- In case the average electricity selling price needs to be adjusted to increase by 5% to less than 10% compared to the current average electricity selling price, the EVN is allowed to adjust the average electricity selling price accordingly after reporting and obtaining approval from the Ministry of Industry and Trade.

Within 15 working days from the date of receiving the complete documentation of the electricity price plan from the EVN, the Ministry of Industry and Trade is responsible for providing a written response for the EVN to implement. Within 5 working days from the date of adjustment, the 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 if it affects the macroeconomic situation, based on the electricity price plan proposed by the EVN, the Ministry of Industry and Trade will coordinate with relevant ministries and agencies to conduct an inspection and send for opinions from the Ministry of Finance and other relevant ministries and agencies. Based on the opinions and suggestions from the Ministry of Finance and other relevant ministries and agencies, the Ministry of Industry and Trade will synthesize and report to the Prime Minister for consideration and opinion.

If necessary, the Ministry of Industry and Trade will coordinate with relevant ministries and agencies to report to the Steering Committee for Price Management before reporting to the Prime Minister.

(2) The documentation of the annual average electricity selling price plan by the EVN includes:

- A report on the annual average electricity selling price plan by the EVN, including analysis and evaluation of the electricity production and business costs in each stage.

- The accompanying contents of the report on the annual average electricity selling price plan by the EVN include: principles for calculating costs in each stage (electricity generation, transmission, distribution - retail, electricity market trading system operation and management, industry operation and management), including the expected input parameters such as exchange rates, domestic fuel prices, imported fuel prices, and the expected operation of power plants in the calculation year without electricity purchase contracts; a summary table of cost calculations for each stage; a detailed table of cost calculations for each stage; documents and materials used as a basis for calculations; explanations of cost ratios and prices used in the expected cost calculations for year N of each stage (if any); explanation of electricity production and business costs that have not been included in the electricity selling price but have been allocated to the electricity production and business costs, and the remaining balance is expected to be allocated to the average electricity selling price in year N; Report assessing the impact of electricity price adjustments on the electricity purchase costs of electricity users. 

- The entire documentation of the annual average electricity selling price plan will be stored in a data storage device attached to the report on the annual average electricity selling price plan by the EVN.

Decision 05/2024/QD-TTg takes effect on May 15, 2024, replacing Decision 24/2017/QD-TTg on the mechanism of adjusting average retail electricity prices.

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