EVN given more power price control

An engineer of the Electricity of Vietnam - Photo: tienphong.vn

According to Decision 24/2017/QD-TTg, signed on June 30, EVN is allowed to raise the average retail price of electricity by 3 percent to less than 5 percent without asking permission from the Ministry of Industry and Trade (MoIT).

The hike can be done when there are fluctuations in input prices, such as the price of coal and gas, or changes in foreign exchange rates, which result in increases to production costs.

The duration of each hike must last at least six months. In case of an increase from 5 percent to less than 10 percent but still within the permitted price range, EVN must ask permission from MoIT.

When EVN proposes an increase of 10 percent or more, or beyond the permitted price range, MoIT must cooperate with the Ministry of Finance to examine the proposal. In case input prices fall, EVN should reduce the retail power price accordingly, the decision said.

The decision, which will take effect from August 15, replaces the Decision 69/2013/QD-TTg which allowed EVN to raise electricity prices only when there is a need for a hike by at least 7 percent to make up for the increase of input prices. Moreover, EVN can only do so after receiving approval from MoIT.

The 7-percent floor rate had made EVN unable to adjust retail electricity prices corresponding to changes in input prices, especially when fuel prices fluctuated, said Nguyen Anh Tuan, head of the Power Regulatory Department under MoIT.

It caused losses to power companies under EVN and made it hard to attract investment in the power industry, he said. Prof Tran Dinh Long, Vice Chairman of Vietnam Electricity Association told the Tuoi tre (Youth) newspaper that the new decision solved the problem but warned that it risked causing instability in the market due to the possibility of frequent small price changes.

He suggested that EVN should still be required to explain in writing when it wants to increase the price of power, even in the range where permission is not required. Another official who was involved in power price regulation also suggested the Government build a mechanism enabling consumer monitoring of power prices to avoid sudden increases.