MoIT proposes a new electricity pricing mechanism

August 04, 2023 | 18:08

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The Ministry of Industry and Trade (MoIT) has proposed a new mechanism to adjust the average retail electricity price, as stipulated by the prime minister.

MoIT proposes a new electricity pricing mechanism

The proposal to amend the Electricity Law for the first time in 20 years is expected to be submitted to the National Assembly at the 8^th session of the National Assembly next year, and to be passed at the 9^th session in 2025.

The MoIT has proposed changes to the following aspects; planning and investment in electricity development; regulations on operating conditions and electricity licences; management of purchase and sale activities towards fostering transparency; and prices as determined by the market. The revised law will also encourage the economical use of electricity, strengthen solutions for managing electricity demand, and regulate electricity consumption.

The ministry stated that the policy was outlined in the current law and implemented in accordance with the prime minister's Decision No.24/2017/QD-TTg.

Utility prices have increased three times since 2017, when prices increased by 6.08 per cent. In 2019, prices rose by 8.36 per cent, and May of this year saw a 3 per cent increase. According to Decision 24, the average retail price should be reviewed and adjusted every six months based on an accurate and complete calculation of input costs for the production and operation of the electricity industry.

The amendment to the law will add regulations to the electricity pricing policy to progressively reduce and eliminate cross-offsetting between consumer categories and regions. The MoIT has stated that it will collaborate with the Ministry of Finance on the matter.

In addition, the draft raises the issue of the decentralisation of electricity tariffs and electricity trading.

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By Angela Nguyen

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