The 4.8% increase in electricity prices cannot immediately determine the profit or loss results.
Vietnam Electricity Group (EVN) officially adjusted the average retail electricity price up, with the new level of 2,103.11 VND/kWh (excluding VAT) from October 11. This adjustment is equivalent to an increase of 4.8% compared to the current average retail electricity price.
EVN's move to increase electricity prices came one day after the results of the cost audit of electricity production and business last year were announced, with a loss of VND21,821.56 billion (excluding income from other production).
Mr. Nguyen Xuan Nam - Deputy General Director of EVN said that in fact, when calculating according to the formula of Decision 05/2024 regulating the mechanism for adjusting the average retail electricity price, the increase is much higher than the 4.8% increase this time.
According to Mr. Nam, the increase in electricity price by 4.8% cannot immediately assess the profit or loss of EVN but must wait until after the electricity price report is available according to the regulations of the Electricity Regulatory Authority, which is until the end of this year.
Associate Professor, Dr. Dinh Trong Thinh - an economic expert, said that the 4.8% increase in electricity prices in the last two months of the year cannot compensate for EVN's losses. In fact, in August and September, the average electricity purchase price was about 6% higher than the average electricity sale price. Therefore, EVN's continued losses are inevitable.
Regarding the impact on the consumer price index (CPI) in 2024, EVN leaders said that this electricity price increase will affect about 0.04%. This is a low level compared to the balanced level, avoiding impact on the CPI and the economy.
3 bases for increasing electricity prices
According to EVN, the first basis is to implement Resolution No. 55 dated February 11, 2020 of the Politburo on the orientation of Vietnam's National Energy Development Strategy to 2030, with a vision to 2045, which requires: "applying market prices to all types of energy" and "removing all barriers to ensure transparent energy prices decided by the market".
Second, according to EVN, this retail price adjustment is carried out in accordance with Decision No. 05 dated March 26, 2024 of the Prime Minister regulating the mechanism for adjusting the average retail electricity price.
Clause 2, Article 3 stipulates: During the year, the average electricity selling price is considered for adjustment based on updated electricity generation costs, electricity purchase costs from power plants providing ancillary services according to basic input parameters in the electricity generation stage and other costs not included in the electricity price.
Clause 5, Article 3 of the Decision stipulates: The minimum time for adjusting the average electricity price is 3 months from the most recent electricity price adjustment.
Article 5 also clearly states: In case the average electricity price needs to be adjusted to increase from 3% to less than 5% compared to the current average electricity price, Vietnam Electricity Group shall decide to adjust the average electricity price to increase at the corresponding level.
The final basis is due to the fact that the cost of electricity production is affected by many input factors such as electricity output, coal, oil, gas prices, and foreign exchange rates.
In which, the source structure fluctuates in an unfavorable direction when sources of cheap electricity purchase decrease, sources of expensive electricity purchase increase compared to 2022.
In 2023, due to the impact of climate change and the El Nino phenomenon, leading to unfavorable hydrological conditions, water levels in hydroelectric reservoirs were very low, especially in the Northern region. Therefore, at the end of the dry season (from mid-May to mid-June), most of the large hydroelectric reservoirs in the North decreased to dead water levels...
Therefore, EVN had to mobilize all thermal power sources, including oil, to ensure electricity supply for people's lives and production activities of enterprises nationwide.
Also according to EVN, although the prices of coal and gas fuels in 2023 will decrease compared to 2022, they will still be high compared to the period of 2020-2021.
"EVN has harmoniously balanced social security factors, reduced the impact on people's lives and the economy, so it decided to increase by 4.8%," said Mr. Nguyen Xuan Nam - Deputy General Director of EVN.
Mr. Tran Viet Hoa - Director of the Ministry of Industry and Trade - said that recently, the State management agency has coordinated to review policy-related issues, such as Decision 28 on the average retail electricity price structure, and research on applying a two-component electricity price.
"This is a global trend, however, each country's conditions are different, so Vietnam needs to carefully and scientifically evaluate and analyze it. Currently, Decision 28 has been submitted to the Government.
Regarding the two-component electricity price mechanism, the research project has been completed and applied to a number of customers. We are coordinating the implementation at the end of this year. When there are results, we will report to the Government," said Mr. Hoa.
