VCCI believes that the regulation of changing electricity prices every 3 months should be maintained, instead of shortening it to 2 months as calculated by the Ministry of Industry and Trade, to suit the synthesis of data of the electricity industry.
In the latest draft on the mechanism for adjusting the average retail electricity price submitted to the Ministry of Justice for appraisal, the Ministry of Industry and Trade proposed to shorten the time for adjusting the average retail electricity price from the current 3 months to 2 months, starting from the last change. The price adjustment level will be issued by the authorities when the cost of electricity production fluctuates by 2% or more, lower than the current 3% regulation.
Commenting, the Vietnam Confederation of Commerce and Industry (VCCI) said that the mechanism for adjusting the average electricity price in the year is based on quarterly data. That is, every 3 months, the electricity industry will synthesize data once. Therefore, VCCI suggested that the drafting agency reconsider the time for adjusting the average electricity price to be at least 3 months, to match the time of synthesizing data, especially the input costs of production of the electricity industry and accounting practices.
Experts have previously suggested that the electricity industry should independently audit input costs and business management before adjusting prices. This transparency is necessary to help businesses and people easily accept and not react negatively to price increases.
Currently, the retail electricity price is implemented according to Decision 05/2024, the time between two electricity price adjustments is 3 months if the input costs are reviewed and checked, causing the price to increase by 3% or more. However, the implementation of this decision is not carried out periodically. In October 2024, the average retail electricity price increased by 4.8%, to VND 2,103.11 per kWh (excluding VAT).
Previously, explaining the adjustment period every two months, the Ministry of Industry and Trade cited statistics on fluctuations in the world coal price index in the period 2022-2024. The data shows that coal prices can increase sharply in one month, up to 40%. Similarly, factors such as the price of liquefied natural gas (LNG) - a raw material that will be used a lot in the coming time, and exchange rates are also factors that can fluctuate sharply in a short time. Therefore, this agency believes that the current adjustment of electricity prices every 3 months does not promptly reflect fluctuations in input parameters.
Over time, the threshold for price increase adjustment is also proposed to be reduced to 2%, instead of the current 3%. The operator said this change is to help the average retail electricity price be adjusted at a more appropriate and timely level.
However, analysts say this could make it difficult for businesses to plan and balance costs. Normally, electricity accounts for 4-10% of a business's cost of goods sold, depending on its size and sector. In the long term, electricity prices follow the market, and operators need to soon apply a two-component price mechanism (capacity and electricity prices), instead of adjusting them up or down during the year.
In addition, the Ministry of Industry and Trade also plans to adjust the basis for determining the standard profit in calculating the average electricity selling price of the distribution - retail, operation - management stages, hydropower plants and dependent accounting units that have not participated in EVN's competitive electricity market.
Specifically, the after-tax return on equity (ROE) of these stages is determined by the average 12-month term deposit interest rate of 4 state-owned commercial banks (Vietcombank, Vietinbank, BIDV and Agribank) as of September 30 of the previous year, plus the expected CPI of the current year.
Thus, ROE according to current data from 4 banks in December 2024 is about 9.2%, corresponding to ROE after tax of about 7.6%. According to the Ministry of Industry and Trade, this level is suitable in the coming period for EVN to improve its financial situation, preserve capital and develop the enterprise. This level also helps the electricity industry have a basis to mobilize capital to continue investing in power sources, especially nuclear power plants. Currently, EVN has proposed that the Prime Minister assign them to continue implementing the Ninh Thuan nuclear power project, expected to be completed in 2030.
EVN and its power generation corporations (Gencos) account for about 37.5% of electricity sources; the remaining 62.5% depends on PVN, TKV and outside investors (BOT, private). Last year, EVN's total consolidated revenue reached about VND575,000 billion. The parent company - EVN is profitable, but the group has not yet announced detailed figures.
TH (according to VnExpress)