MOIT has sent to the Ministry of Justice (MOJ) a dossier on creating a new decision to replace Decision 24/2017 on the average electricity price adjustment mechanism.

The compilation of the draft document aims to adjust electricity prices in accordance with the roadmap approved by the government. The formula used to calculate average electricity retail prices will be amended: the real electricity production costs will be included in the calculation. 

In addition, the draft decision also aims to amend and supplement the definitions and adjust the electricity price calculation formula to truly reflect production costs in a competitive electricity wholesale market where there are many sellers and buyers. The regulations on the role of the State Capital Management Commission will also be clarified.

The electricity price adjustment cycle as prescribed in Decision No 24/2017/ is six months, which means that the price can be adjusted once every six months. 

Meanwhile, the draft document says the price adjustments can be made many times within a year to avoid an impact on the macro economy. This will allow time to see the impact of input factor fluctuations on electricity prices.

The draft document adjusts the principle for adjusting the average electricity selling price according to the roadmap: comparing the average electricity selling prices at specified times (annual, quarterly) with the current prices so as to consider the adjustments; updating electricity prices quarterly with consideration for electricity generation costs and expenses not yet included in the electricity price; and shortening the electricity price adjustment cycle from six months to three months.

The electricity prices need to be adjusted step by step, in accordance with a roadmap, so as to avoid shocks which may adversely affect the macro economy, enterprises’ production, and people’s lives, as per the direction of the government.

Comparing the results of electricity price calculation at the time of calculation with the current electricity prices, instead of comparing input parameters, is a tool to implement the price adjustment effectively, which timely reflects electricity production and business costs at the calculation times.

When counting all production costs and expenses, MOIT will set a legal framework allowing electricity companies to recover production costs and make reasonable profits within a shorter time. 

Regarding the possible impacts on people, MOIT believes that the new scheme would help ease and evenly distribute the impacts on the price adjustment, thus avoiding big shocks to the society.

Luong Bang