A workshop on electricity price policy and the Vietnamese electricity market was held several days ago by the National Assembly’s Standing Committee and the Vietnam Union of Science and Technology Associations (VUSTA).

Deputy Head of the Electricity Regulatory Authority (ERA) under the Ministry of Industry and Trade (MOIT) Tran Tue Quang said the expenses that make up electricity production costs are counted when calculating electricity selling prices, and electricity prices are adjusted in accordance with market supply and demand, ensuring macroeconomic stability.

The retail prices have been adjusted not only to ensure financial stability for the Electricity of Vietnam (EVN) to make investments and operate the system, but also to ensure financial capability for investors to stabilize electricity production and business.

However, any adjustment will affect the macro economy and people’s lives, and electricity prices are unchanged in some years.

Quang proposed issuing a decree on adjusting electricity retail prices under the jurisdiction of the government and electricity units, and electricity pricing policies by region.

According to MOIT, Deputy Minister Dang Hoang An said that the electricity prices will still be regulated according to the market with the intervention of the state, which means that even when the retail electricity market takes shape, the market will still be under the control of the state. Resolution 55 on power development also emphasizes this view.

“The energy and electricity prices must occur under market rules, but the state will still have to control the market, no matter the structure of the power sector. The problem is at what level the intervention should be to ensure healthy competition and transparency,” An said.

The Law on Electricity Law and Price Law lay the foundation for the management of the costs of the power sector. Vietnam will have to continue to amend the Electricity Law, legalizing the regulation of electricity prices and the electricity market. In addition, MOIT has also proposed building the Renewable Energy Law and amending the Law on Economical and Efficient Use of Energy.

MOIT has proposed a new retail price adjustment method, under which EVN will calculate average retail prices.

If the average retail prices decrease by 1 percent or more compared with current prices, EVN will lower the retail prices accordingly, submit documents, and report to MOIT and the Ministry of Finance.

If the average price needs to be raised from 3 percent to below 5 percent compared with current prices, EVN can raise prices accordingly.

If the average price increases from 5 percent to below 10 percent, EVN will report to MOIT and will raise the price if it gets approval from MOIT.

If the average price increases by more than 10 percent, MOIT will report to the Prime Minister.

The minimum time between the price adjustments is three months since the latest adjustment, or three months shorter compared with the current regulation (6 months).

On the basis of the electricity supply plan and the system operation plan set by MOIT, as well as the results of the electricity production and business cost examination, EVN will calculate the average retail prices.

Under the current regulations stipulated in Decision 24/2017 of the Prime Minister on the mechanism on adjusting average retail electricity prices, EVN has the right to raise electricity prices once the input indicators go up by 3 percent or more compared with current average levels.

Vice versa, if the input factors decreased, EVN has the right to lower the selling prices.

Luong Bang