WHETHER EVN AUTOMATICALLY ALLOWED TO INCREASE THE AVARAGE ELECTRICITY RETAIL PRICE BASED ON THE NEW AVARAGE PRICE FRAMEWORK?

On February 3, 2023, the Prime Minister issued Decision No. 02/2023/QD-TTg ("Decision 02") stipulating the framework for average electricity retail price applicable to organizations and individuals participating in electricity activities and electricity usage. Decision 02 replaces Decision No. 34/2017/QD-TTg ("Decision 34") regulating the framework for the average electricity retail price in the period of 2016 – 2020.  The fluctuation of input data affects the costs of sales, especially the significant increase of fuel price recently has pushed up the costs of electricity production, which has led to the demand for a rise in electricity price. The average electricity price framework will be the basis for adjustment of electricity retail price and tariff for consumers.

Compared to the current average electricity price framework specified in Decision 34, the newly adjusted average electricity price has increased considerably, exceeding 10%, specifically:

However, according to Clause 5, Article 5 of Decision No. 24/2017/QD-TTg stipulating the mechanism for adjusting the average electricity retail price, in case the average electricity sale price needs to be increased by 10% or more compared to the current average electricity sale price or out of the price framework or having effects on the macroeconomic situation, The Vietnam Electricity have to prepare a dossier of electricity price increase plan and submit it to the Ministry of Industry and Trade as well as the Ministry of Finance for inspection and review, then report to the Prime Minister for consideration and comment. Accordingly, although EVN's average electricity sale price falls within the new framework for average electricity retail price, EVN will have to ask for permission of the Prime Minister before raising the price if the adjustment exceeds 10% or more of the current average electricity sale price. This regulation aims to minimize cases of excessive electricity price increases, causing significant impact on people's lives and the macro-economy.

Decision 02 takes effect from the date of issuance.