Proposal for EVN to calculate unpaid costs in electricity prices
In the third draft of the Decree amending and supplementing Decree 72/2025 on the mechanism and time for adjusting average retail electricity prices, the Ministry of Industry and Trade proposed to add a provision allowing Vietnam Electricity Group (EVN) to calculate other previously fully accounted expenses into average retail electricity prices.
This creates a legal basis for EVN to recover losses from previous years through adjusting retail electricity prices in the following years. The Ministry proposes 2 additional cost options:
Option 1 allows EVN to allocate unpaid costs directly to electricity production and supply in the average retail electricity price, based on audited financial statements from 2022 onwards, after deducting profits from other activities (if any). This option can be applied in the following years if it continues to arise.
Option 2 only handles direct expenses that have not been compensated from 2022 until before this decree takes effect, not applicable to the following years.
Only reasonable and objective costs are included in electricity prices
In an interview with Lao Dong, Associate Professor, Dr. Ngo Tri Long - former Director of the Institute for Price Market Research (Ministry of Finance) - said that allowing unccountable costs to be included in electricity prices should be recognized in three axes of benefits: State - Enterprise - Consumer.
"The Electricity Law 2024 clearly defines the principle: Average retail electricity prices must accurately reflect reasonable, valid costs, with audits and appraisals. Thus, it is necessary to determine reasonable and objective costs due to fuel fluctuations, exchange rates, natural disasters, and macro policies - this is an amount that can be included in electricity prices.
Regarding unreasonable and subjective costs due to poor management, spreading investment, and losses. EVN must take responsibility for this Clause and cannot "push" it to consumers. If there is no separation, the policy will lose its authenticity, creating an unfair burden for society" - Associate Professor, Dr. Ngo Tri Long emphasized.
According to Associate Professor, Dr. Ngo Tri Long, if option 1 is applied, it is possible to include all uncountable costs in electricity prices in the future, which could reduce the incentive for electricity businesses to control costs, innovate technology, and save electricity, because they know that all arising expenses can be compensated through retail prices.
Option 2 is temporary, only handling special situations in the period of 20222023, and at the same time having a mechanism to reduce other operating profits. This is a more balanced choice, both solving immediate difficulties and maintaining long-term market discipline.
Removing short-term difficulties for EVN, still maintaining long-term market discipline
To both remove difficulties for EVN and protect the interests of the people and ensure compliance with the law, Associate Professor, Dr. Ngo Tri Long said that option 2, limiting cost handling in the period of 2022-2023, not expanding to the following years is reasonable.
"Separate reasonable and unreasonable costs, only objective and valid costs are included in the electricity price; EVN must bear the unreasonable costs. All costs included in electricity prices must be audited, widely announced and subject to the supervision of the Ministry of Finance and the State Audit. Only when there is transparency, people and businesses can trust that they only bear reasonable costs, not have to pay for weakness in management" - this expert emphasized.
According to Associate Professor. Dr. Ngo Tri Long, choosing option 2 is the most reasonable, both removing short-term difficulties for EVN and not eliminating cost-saving motivation, while maintaining market discipline. More importantly, the State must closely monitor, publicize and be transparent, to create trust and social consensus.
