Electricity will also have a price stabilization fund.

The draft Decision of the Prime Minister on the mechanism for adjusting the average electricity selling price mentions the possibility of establishing a price stabilization fund, similar to the current approach with gasoline and diesel.

EVN plans to increase electricity prices by 30 VND per kWh in 2016 / Electricity prices may be audited next year.

This is one of the notable points in the draft decision of the Prime Minister regulating the mechanism for adjusting the average retail electricity price, which the Ministry of Industry and Trade just released today for public comment.

Accordingly, if necessary, the State will use the price stabilization fund to stabilize selling prices in order to minimize adverse impacts on macroeconomic stability and social welfare. This is a method that has been applied to gasoline and diesel for a long time, but it is also being considered for change as the price management of these commodities increasingly approaches market forces.

Electricity prices will increase by at least 3% each time.

The source of funding for the electricity price stabilization fund will be derived from electricity selling prices and included in the cost of electricity production and business. However, the fund will only be established when the input factors that determine electricity selling prices decrease compared to current levels and all outstanding electricity production and business costs (not yet fully included in the selling price) have been resolved. The draft proposes granting EVN the authority to establish, manage, and utilize the electricity price stabilization fund.

In addition to the price stabilization fund, the draft also stipulates that the Prime Minister will have the authority to regulate the electricity price framework. The minimum increase for each electricity price hike is 3%, and the minimum time between two adjustments to the average price is 3 months.

When input costs increase, causing the average electricity selling price at the time of calculation to be 3-5% higher than the current price and within the regulated price range, the Vietnam Electricity Group (EVN) is allowed to adjust the average selling price accordingly. The enterprise only needs to report to the Ministry of Industry and Trade and the Ministry of Finance for verification.

If an increase of more than 5% is needed, or if the average electricity selling price needs to be adjusted beyond the price range, EVN must prepare a pricing plan, report it to the Ministry of Industry and Trade, and send it to the Ministry of Finance for appraisal and submission to the Prime Minister for consideration and comments.

If input costs cause the average electricity selling price at the time of calculation to be lower than the current average electricity selling price and within the price range (after deducting the electricity price stabilization fund), the regulation requires EVN to immediately reduce the selling price by a corresponding amount, regardless of the reduction.

The draft also assigns the Ministry of Industry and Trade the responsibility of inspecting and supervising the implementation of adjustments to the average electricity selling price. If necessary, the Ministry of Industry and Trade has the right to issue a document requesting EVN to reduce or stop increasing the average electricity selling price, and is allowed to invite independent consultants to review the dossiers for adjusting the average electricity selling price...

Another notable regulation is that the Ministry of Industry and Trade will also publicly disclose the formula for calculating the average electricity selling price.

Accordingly, the basis for adjusting electricity prices includes 10 constituent factors such as: total electricity generation costs, total allowable revenue from electricity transmission, costs of electricity distribution and retail sales, and standard profit margins, the level of contributions to the electricity price stabilization fund, etc.

According to Vnexpress