The Ministry of Industry and Trade has just submitted to the Ministry of Justice the draft decision to replace Decision No. 24/2017/QD-TTg on the mechanism for adjusting the average electricity selling price .
The purpose of drafting this decision is to establish a mechanism for adjusting electricity prices according to the roadmap directed by the Standing Committee of the Government; at the same time, to amend the formula for calculating the average retail electricity price to include factors related to the actual cost of electricity production and business, and to supplement regulations on the documentation of electricity pricing plans based on the opinions of the Government Inspectorate .
Furthermore, the draft new decision aims to amend and supplement the definitions and adjust the formula for calculating electricity prices to reflect the buying and selling of electricity in a competitive wholesale electricity market with multiple buyers and sellers; and to add the role of the State Capital Management Committee at enterprises.
According to Decision No. 24/2017/QD-TTg, the electricity price adjustment cycle is 6 months. The draft decision proposes studying a phased adjustment of electricity prices, potentially adjusting prices multiple times a year to avoid significant impacts on the macroeconomic economy , while ensuring that fluctuations in input parameters are reflected in electricity prices in a timely manner.
Specifically, the draft amendment revises the principles for adjusting the average electricity selling price to adjust electricity prices according to a roadmap: Comparing the calculated average electricity selling price at specified times (annually, quarterly) with the current average electricity selling price to consider adjustments; Calculating and updating electricity prices quarterly based on electricity generation costs and other costs not included in the price; Shortening the electricity price adjustment cycle from 6 months to 3 months.
"Electricity prices are being adjusted gradually according to a suitable roadmap, avoiding abrupt changes and preventing significant impacts on the macroeconomic economy, business production, and people's lives, in accordance with the directives of the Standing Committee of the Government," the Ministry of Industry and Trade analyzed.
Comparing the calculated electricity price at the time of calculation with the current electricity price to consider adjustments, instead of comparing input parameters, is a tool to effectively implement electricity price adjustments according to the roadmap, reflecting the costs of electricity production and business at the calculated times in a timely manner.
Allowing for the quarterly calculation of costs not included in electricity prices, in the context of rising fuel prices compared to the period before 2022, will create a legal framework for businesses to recover reasonable and legitimate electricity production and business costs in a shorter time than the current method.
For the public, the Ministry of Industry and Trade believes that adjusting electricity prices according to a roadmap will reduce and distribute the impact of price adjustments evenly across households, avoiding major changes and disruptions that could cause negative public opinion.
Another notable point in this draft is the revision of the method for determining the average electricity selling price, and the formula for calculating the average retail electricity price, which is linked to the actual electricity production and business operations.
Accordingly, the formula for calculating retail electricity prices allows for the recovery of losses from electricity production and business operations, including exchange rate differences in electricity purchase and sale contracts, losses from electricity production and business operations, and other costs not included in the retail electricity price but identified in audited financial statements.
Citing the case of Vietnam Electricity Group (EVN) incurring a loss of 26,000 billion VND in 2022, the Ministry of Industry and Trade analyzed: With the business results in 2022 showing a loss and costs continuing to accumulate in 2023 due to the electricity price adjustment not being sufficient to recover input costs, while Decision No. 24/2017/QD-TTg does not specifically stipulate the consideration of actual production and business costs in calculating planned electricity prices.
This makes it difficult for EVN to recover costs and offset past losses. This somewhat affects EVN's ability to develop and preserve state capital if its business operations continue to incur losses.
"Based on current regulations in the Law on Prices, electricity prices need to ensure sufficient coverage of actual costs and a reasonable profit. Therefore, the formula for calculating the average electricity selling price needs to be adjusted to better clarify the factors related to the cost of electricity production and business," the Ministry of Industry and Trade argued.
EVN still has losses from exchange rate differences from previous years that have not been fully accounted for. The 26,000 billion VND loss of EVN in 2022 does not yet include these exchange rate differences. According to the Ministry of Industry and Trade's inspection results, the amounts not yet accounted for in the cost of electricity production and business in 2022 include: the remaining exchange rate difference implemented under power purchase agreements of power generation units in 2019 with an amount of approximately VND 3,016 billion; in 2020 approximately VND 4,567 billion; in 2021 over VND 3,702 billion; and in 2022 approximately VND 3,440 billion. |
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