Mr. Nguyen Anh Tuan-Director of the Electricity Regulatory Authority of Vietnam (Ministry of Industry and Trade)- Photo source: Industry and Trade Newspaper
Reporter: Could you please give the reason to revise the decision 69/2013/QD-TTg on the mechanism to adjust the average retail electricity tariff ?
Mr. Nguyen Anh Tuan: besides the positive aspects, the decision 69 revealed some outstanding issues that need to be considered and changed.
Namely: the decision 69 stipulated the average retail electricity tariff is considered for adjustment when input parameters are variable. Other parameters are only considered for adjustment of the average retail electricity tariff after audited reports and settlement reports are available. Accordingly, the average retail electricity tariff that is adjusted based on basic input parameters of generation in a year and annually based on the variable input parameters of generation, transmission and distribution has not clearly separated, leading to misunderstanding when adjusting electricity tariff.
The clear separation in adjusting the average retail electricity tariff in the year and annually in decision No. 24/2017/QĐ-TTg (Decision 24) will guarantee the publicity and transparency of the power tariff and the electricity tariff management requirements according to market rules.
On the other hand, in the period 2013-2016, power operations had some changes such as deployment of the competitive generation market from 1 July 2012, policies encouraging the development of renewable energy, issuance of the regulations on power plants providing supporting services in the system. Therefore, the Decision 69 needs to be added and revised in conformity with reality.
A further point in the decision 69 stipulates the adjusted electricity tariff threshold at a minimum rate of 7%. This level is considered high and may impact on the production, business of enterprises as well as the livelihood of the people in case of electricity tariff adjustment. In addition, the adjustment of the average retail electricity tariff when the electricity tariff increased from 7% and over will not reflect in a timely manner the current volatility of the input parameters in the base year.
Meanwhile, Price Law issued by the National Assembly in June 2012 stipulated that for the retail electricity price, the enterprise will be entitled to offer electricity pricing within the frame issued by the relevant authorities. The law on amendments and supplements to some articles of the Electricity law in 2012 also regulated the retail electricity price would be given by the power retail units. There are recommendations that EVN should be given the authority in adjusting power tariff to a certain level in conformity with the Price Law, Electricity Law and consistent with the orientation of adjusting the power tariff following the market mechanism.
Besides, public opinion also requires the need to enhance the publicity and transparency of electricity tariff as well as strengthen the checking and control of the electricity tariff to EVN.
This is exactly the reason to enact the decision replacing decision 69.
Reporter: In your opinion, what are new points in decision 24 compared to decision 69?
Mr. Nguyen Anh Tuan: Decision 24 to be built on the basis of inheritance, modification and supplements of Decision 69, there are has 4 new points: Firstly, it is clearly stipulated that the adjustment mechanism of the average retail electricity tariff in the year according to the changes in the basic input parameters and annual adjustment mechanism of electricity tariff according to changes in input parameters of all the subsectors: generation, transmission and distribution. Secondly, there is a new article on the calculation method of average retail electricity tariff, clearly define components of production cost and power sale cost. Thirdly, the revision is made for the authority to adjust the average retail electricity tariff in article 4, Decision 69 that allow EVN to increase the average retail electricity tariff from 3% to under 5% compared with the current average retail electricity tariff. Fourthly, there are additional regulations on reporting, inspection, monitoring and disclosure of information.
Reporter: What is the control process when allowing EVN to increase average retail electricity tariff from 3-5% without reporting to higher authority?
Mr. Nguyen Anh Tuan: In Decision 24, it is clearly stated that in case the calculated average retail electricity tariff is higher than the current average retail electricity tariff from 10% or over or outside the tariff frame that affect the macroeconomic situation, the Ministry of Industry and Trade, in collaboration with the Ministry of Finance checks, reviews and reports to the Prime Minister for instruction on level of adjustment of the average retail electricity tariff.
Where necessary, the Ministry of Industry and Trade in collaboration with the Ministry of Finance reports to the Price Steering Committee before reporting to the Prime Minister. Therefore the tariff increase, even within the tariff frame, if affecting macroeconomy, EVN is not allowed to increase the power tariff.
Reporter: Are the costs of electricity production and sales of EVN continued to be examined and disclosed publicly, how to treat the increase of power tariff in case of errors?
Mr. Nguyen Anh Tuan: Under the provisions of Decision 24, every year, after the settlement report of electricity production and sales and audited financial reports of EVN and its members are available, the Ministry of Industry and Trade, in collaboration with the Ministry of Finance examines the cost of power production, and sales of the previous year. In the process of checking, the Central Committee of the Vietnam Fatherland Front, Vietnam Chamber of Commerce and Industry, other relating associations and state authorities can be invited to participate. The Ministry of Industry and Trade is entitled to invite an independent consultant to review the reports of the EVN and its members. The content of review will be publicly disclosed for the authorities and the people participating in the monitoring and supervision.
For the case of increasing the electricity tariff price, if errors are found in the results of power tariff calculation, the Ministry of Industry and Trade is responsible for requesting EVN to stop the adjustment of the average retail electricity tariff and or re-adjust the average retail electricity tariff and subject to the sanction according to the the law stipulating in the Decree No. 109/2013/ND-CP on administrative violation sanction in management of price, charges, fees, bills and Decree No. 49/2016/ND-CP of the Government dated 27 May 2016 to modify and supplement some articles of Decree No. 109 or the replaced legal documents (if available).
Reporter: thank you!