EVN technicians perform routine maintenance at a power station in HCM City. (Photo: VNA) That was the ruling from the government in Decision No.05/2024/QD-TTg, signed recently by Deputy Prime Minister Le Minh Khai, toregulate the country's electricity price adjustment system.
The decision allows the adjustment of the average retail prices inthe event of changes in the prices of its input costs including production,transmission, distribution, management and support services among others.
If input costs fall by 1% than the in-effect average retailprice, it must be adjusted down. In the event the input costs rise by more than3%, it can be adjusted up, with a minimum waiting period of three monthsbetween each adjustment.
The minimum waiting period between price adjustments was sixmonths previously.
Vietnam Electricity (EVN) will be given autonomy to implementa price increase within the range of 3-5%. Within five working days since thebeginning of an adjustment, the EVN must report to the Ministry of Industry andTrade (MoIT), among other ministries and governmental agencies, to form aschedule for inspection and supervision during the period.
In the event that the EVN proposes a price increase within therange of 5-10%, the EVN must report to the MoIT. Within 15 working days, theministry, in turn, must provide the EVN with an answer.
Suppose the EVN proposes a price increase greater than 10%. Inthat case, the MoIT is charged with the task of submitting a report, after aperiod of co-consulting with other ministries and governmental agencies, to thecentral government and the Prime Minister for review.
The ministry is tasked by the Prime Minister to provide the EVNwith a framework to calculate the average retail prices of electricity,implement and adjust the prices and oversee the periods.
In addition, the MoIT, with the support of the Ministry ofFinance, among other ministries and governmental agencies, reports to theSteering Committee for Price Management and the Prime Minister.
Economist Tran Dinh Long said a shorter price period will helpbring electricity prices closer to the market price. However, it is still veryimportant to expedite the implementation of a competitive electricity market toensure that electricity prices truly follow market principles.
Nguyen Tien Thoa, Chairman of the Vietnam Valuation Association, saida shorter price period will allow the EVN to more quickly respond to changes ininput costs.
"The longer they have to wait, the greater their financiallosses and the chance of a shock increase," he said.
Tran Viet Hoa, Director of the Electricity Regulation Departmentunder the MoIT, said just because theoretically the EVN can submit a proposalevery three months doesn't mean they will do so. Many other aspects, includingthe potential impacts on macroeconomic factors and the input costs, will beconsidered.
Economists have long suggested that shortening the time for priceadjustments is a necessary preparation step towards a competitive electricitymarket./.
VNA
