Ministry of Industry and Trade explains proposal to shorten electricity price adjustment cycle to 3 months/time

Deputy Minister of Industry and Trade Do Thang Hai answered at the press conference.

Deputy Minister of Industry and Trade Do Thang Hai said that regarding the authority to adjust prices, according to Decision No. 24/2017/QD-TTg of the Prime Minister , Vietnam Electricity Group (EVN) has the authority to adjust the average retail electricity price from 3% to less than 5%. This regulation aims to ensure the level of autonomy of enterprises within the price range approved by the Prime Minister.

Regarding the electricity price adjustment cycle, due to the impact of the world geopolitical situation, world fuel prices increased from the end of the first quarter of 2022, the cost of fuel that Vietnam had to import to produce electricity also increased according to world prices, causing EVN's electricity purchase cost to increase, affecting the financial balance and cash flow of the enterprise.

EVN has proposed to increase electricity prices in 2022 and 2023 to ensure cash flow to pay for electricity purchases from power plants, supporting the improvement of EVN's financial situation. With fluctuations in input parameters (mainly fuel prices), the calculation results show that electricity prices need to be adjusted to a high level to ensure financial balance and cash flow for EVN.

During the process of considering EVN's proposal to adjust electricity prices for 2022 and 2023, the Government Standing Committee and the Prime Minister suggested that it is necessary to study and adjust electricity prices in a step-by-step manner to be appropriate, avoiding sudden changes (based on studying and amending Decision No. 24/2017/QD-TTg), avoiding causing major impacts on the macro-economy, business production and people's lives.

Implementing the direction of the Government Standing Committee and the Prime Minister, based on the proposal of EVN, the Ministry of Industry and Trade has researched and drafted regulations to shorten the electricity price adjustment cycle to 3 months/time. This is also consistent with the provisions of Decision No. 24/2017/QD-TTg that EVN must report on the calculation of updated electricity prices every quarter.

However, because electricity price is an important and sensitive commodity, directly affecting production, business activities, people's lives and macroeconomic indicators, the implementation of electricity price adjustment with the necessary level and time of adjustment must be reported and requested for direction from the Prime Minister to ensure macroeconomic management, political, economic and social stability.

Deputy Minister Do Thang Hai answered about the roadmap to implement the two-component electricity price.

Reporters asked, the request to study and develop a two-component electricity price list to reduce cross-subsidy was made in Decision 28/2014/QD-TTg. However, up to now, the Ministry of Industry and Trade has still proposed it in a new draft. So what is the roadmap for the Ministry to implement a two-component electricity price list and reduce cross-subsidy in electricity prices?

Responding to this content, Deputy Minister Do Thang Hai said that, based on the analysis of the proposals in the project to improve the structure of retail electricity prices and on the basis of analyzing the characteristics of the current socio-economic situation, the Ministry of Industry and Trade proposed to improve the structure of retail electricity prices in 2 phases. Specifically:

Phase 1: Amend the electricity price for customers using electricity for non-domestic purposes at a minimum level, ensuring to avoid causing too much fluctuation in the implementation of the retail electricity price structure but still solving urgent issues raised by public opinion and people in the past time, specifically as follows:

Add the customer group "tourist accommodation establishments" to apply the retail electricity price equal to the retail electricity price for production on the basis of separating from the business customer group to implement the direction in Resolution No. 08-NQ/TU dated January 16, 2017 of the Politburo.

Combining electricity prices according to voltage levels to suit the actual development of the power grid at the Power Corporations. Specifically, retail electricity prices according to voltage levels include: High voltage (voltage level above 35kV), medium voltage (from 1kV to 35kV), low voltage (below 1kV) applied to groups of customers in production, business, administration, and tourist accommodation establishments.

Supplement the retail electricity price structure for the group of customers using electricity for production at the voltage level of 220kV or higher to suit the actual development of customers and ensure that the electricity price reflects the cost of electricity production and business by adjusting the calculation results of the electricity selling price for the 220kV level based on the difference in electricity price of the 110kV level and the average cost up to the 220kV level.

Maintain the retail electricity price structure for administrative and professional customers to avoid too much impact on the customer group that is most affected by the Covid-19 epidemic. Maintain the current electricity price for other businesses to ensure minimizing large fluctuations in the average retail electricity price and minimizing the increase in electricity price for the production customer group. Supplement the retail electricity price structure for the electric vehicle charging station/pole customer group according to the principle that the electricity price accurately and sufficiently reflects the production and business costs for the electricity industry.

The Deputy Minister said that currently, the use of electric vehicles is being encouraged. Meanwhile, electric vehicles must have charging stations, so it is necessary to introduce regulations on the retail electricity price structure for this group of customers.

Phase 2 , in the coming years, the Ministry of Industry and Trade will continue to coordinate with EVN to monitor, update data, and assess the impact of the proposed plan in the Project (according to the principle of price reflecting full costs) on the production situation and people's lives, develop a roadmap for application in each phase in accordance with the economic recovery to report to the Prime Minister for decision, including considering the trial application of the proposed 2-component electricity price according to capacity and electricity to apply to customers using electricity for production at 110kV level or higher for careful assessment before official application.

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