New regulations on the time for adjusting the average electricity retail price in Vietnam as of May 15, 2024

New regulations on the time for adjusting the average electricity retail price 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 on the mechanism for adjusting the average electricity retail price, which will take effect on May 15, 2024.

1. New regulations on the time for adjusting the average electricity retail price in Vietnam as of May 15, 2024

According to Article 3 of Decision 05/2024/QD-TTg, the principles for adjusting the average electricity retail price are as follows:

- Annually, after examining the production and business costs of electricity in year N-2 of the Vietnam Electricity Group, the average electricity retail price for year N will be reviewed and adjusted based on the objective fluctuations of input parameters in all stages (electricity generation, transmission, retail distribution, electricity system regulation and operation, electricity market trading, and ancillary services - system operation and management) and the allocation of other costs not included in the electricity price.

- During the year, the average electricity retail price will be reviewed and adjusted based on the updated costs of electricity generation, the cost of purchasing electricity from power plants providing ancillary services according to the basic input parameters in the electricity generation stage, and other costs not included in the electricity price.

- When the average electricity retail price decreases by 1% or more compared to the current average electricity retail price, the electricity price may be correspondingly adjusted downwards.

- When the average electricity retail price increases by 3% or more compared to the current average electricity retail price, the electricity price may be correspondingly adjusted upwards.

- The next adjustment to the average electricity retail price is at least 3 months from the last price adjustment.

- The average electricity retail price will be calculated according to the regulations in Article 4 of Decision 05/2024/QD-TTg. In the event that the calculated average electricity retail price falls outside the price framework, it will only be considered for adjustment within the price framework determined by the Prime Minister.

The Vietnam Electricity Group will be allowed to adjust the average electricity retail price within the price framework according to the mechanisms stipulated in Article 5 and Article 6 of Decision 05/2024/QD-TTg.

In case the average electricity retail price needs to be adjusted higher than the current average electricity retail price by 10% or more, or if it affects the macroeconomic situation, the Ministry of Industry and Trade will lead and coordinate with relevant ministries and agencies to inspect, review, and report to the Prime Minister for consideration and opinions. 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.

- The adjustment of the average electricity retail price must be carried out publicly and transparently.

Previously, according to Decision 24/2017/QD-TTg, the minimum time for adjusting the average electricity retail price was 6 months from the last price adjustment.

Therefore, according to the new regulations, the minimum time for adjusting the average electricity retail price will be reduced from 6 months to 3 months.

At the same time, when the average electricity retail price decreases by 1% or more compared to the current average electricity retail price, the electricity price may be correspondingly adjusted downward.

For more details, please refer to Decision 05/2024/QD-TTg, which will take effect on May 15, 2024, and replace Decision 24/2017/QD-TTg.

Nguyen Ngoc Que Anh

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