In its appraisal dossier for the revised Electricity Law submitted to the Ministry of Justice, the Ministry of Industry and Trade stated that retail electricity prices must closely track input cost fluctuations to ensure businesses are profitable. This measure would help power sector enterprises preserve capital and develop their business in line with market stages.
The Ministry proposes that electricity production and supply costs not fully accounted for in a single price adjustment will be accumulated and allocated to subsequent increases. Similarly, costs not factored into prices before the new draft law takes effect would also be divided and added to future price changes.
In reality, many electricity production and supply costs over the past period were not fully included in retail electricity prices, leading to substantial losses for EVN, totaling approximately 50.029 trillion VND during the 2022-2023 period.
Specifically, in 2022, electricity prices remained unchanged to support economic recovery and social welfare after Covid-19, despite sharp increases in imported coal and gas prices due to the Russia-Ukraine conflict. In 2023, prices increased, but moderately, remaining significantly lower than actual incurred costs.
Thanks to a return to profitability in 2024, the accumulated loss of EVN's parent company decreased to approximately 44.792 trillion VND.
Therefore, the Ministry of Industry and Trade believes that the mechanism for allocating previously uncalculated costs into electricity prices will provide the legal basis to definitively resolve EVN's outstanding balance.
The regulatory agency affirmed that cost allocation would occur incrementally, either in full or in part, with small margins to avoid sudden impacts on citizens and businesses.
"Under favorable conditions, such as ample water in hydropower reservoirs reducing generation costs, the allocation of outstanding costs would not lead to an increase in electricity prices," the Ministry stated.
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Power company employees inspect power lines. Photo: Ngoc Thanh |
Last year, when amending Decree 72 on average retail electricity price policy, this mechanism was previously proposed by the Ministry of Industry and Trade. At that time, the agency sought to allow the inclusion of electricity production and supply costs not fully accounted for during the 2022-2024 period, amounting to approximately 44.8 trillion VND, into future electricity pricing plans.
However, many opinions at the time argued that there was no legal or practical basis to calculate and allocate these costs into electricity prices.
Phuong Dung
