Decree No. 72/2025/ND-CP dated March 28, 2025 on means and interval for adjusting average electricity retail prices

DECREE

ON MEANS AND INTERVAL FOR ADJUSTING AVERAGE ELECTRICITY RETAIL PRICES

Pursuant to the Law on Government Organization dated February 18, 2025;

Pursuant to the Law on Electricity dated November 30, 2024;

At request of the Minister of Industry and Trade;

The Government promulgates Decree on means and interval for adjusting average electricity retail prices.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and regulated entities

1. This Decree elaborates Point a Clause 3 Article 50 and Point c Clause 2 Article 52 of the Law on Electricity, including:

a) Point a Clause 3 Article 50 on means and interval for adjusting electricity retail prices;

b) Point c Clause 2 Article 52 on electricity retail price promptly reflected and adjusted in accordance with practical deviation of input parameters to compensate for reasonable and valid expenses and reasonable profits so as to preserve and develop business capital of enterprises in a manner that is appropriate to socio-economic conditions from time to time and levels of the competitive electricity market;

2. This Decree applies to agencies, organizations, and individuals engaged in electricity operations and electricity use.

Article 2. Definitions

In this Decree, terms below are construed as follows:

1. Electricity buyer (hereinafter referred to as “the Buyer”) means Vietnam Electricity (EVN) and Power Corporations affiliated to EVN.

2. Electricity seller (hereinafter referred to as “the Seller”) means an electric utility, organization, or individual implementing power purchase agreement (PPA) and entering into PPA with the Buyer.

3. Average electricity retail price means electricity retail price determined on the basis of totaling electricity production and sale expenditure and average profit for 1 kWh of commercial electricity from time to time

4. Applicable average electricity retail price means the average electricity retail price applicable on the date on which electricity price adjustment is considered.

5. Average electricity retail price bracket (hereinafter referred to as “price bracket”) means a range between the minimum electricity retail price and the maximum electricity retail price.

6. Year N means the year in which average electricity retail price is developed in accordance with this Decree.

7. Basic input parameters in electricity generation means factors that directly affect electricity generation prices, are beyond control of electricity entities, and include fuel costs, foreign exchange rate, electricity generation structure and market electricity purchase price where market electricity purchase price is paid to electric utilities engaged in electricity market in accordance with regulations on electricity market operation promulgated by the Ministry of Industry and Trade.

Chapter II

MEANS AND INTERVAL FOR ADJUSTING AVERAGE ELECTRICITY RETAIL PRICES

Section 1. MEANS FOR ADJUSTING AVERAGE ELECTRICITY RETAIL PRICES

Article 3. Principles of adjustment of average electricity retail prices

1. On an annual basis, after EVN discloses electricity production costs of year N-2, average electricity retail prices of year N shall be taken into consideration and adjusted by objective fluctuations of input parameters of all stages (generation, transmission, distribution – retail, load dispatch and market regulation, auxiliary services for electrical system and industry coordination – management) and allocation of other costs that have not been included in electricity price.

2. On an annual basis, average electricity retail prices shall be considered for adjustment on the basis of updating electricity generation costs, electricity purchase costs from power plants that provide auxiliary services based on basic input parameters in generation and other costs that have not been included in electricity price.

3. Where average electricity retail prices drop by at least 1% relative to current average electricity retail prices, electricity prices shall be adjusted accordingly.

4. Where average electricity retail prices increase by at least 2% relative to current average electricity retail prices, electricity prices shall be adjusted accordingly.

5. Average electricity retail prices shall be calculated in accordance with Article 4 hereof. Where calculated average electricity retail prices are outside the price bracket, average electricity retail prices shall be so adjusted to not fall outside the price bracket. EVN may increase or decrease average electricity retail prices within the price bracket via means detailed under Article 5 and Article 6 hereof.

Where average electricity retail prices must be increased by at least 10% relative to current average electricity retail prices, the Ministry of Industry and Trade shall take charge and cooperate with relevant ministries, agencies in examining, reviewing ,and requesting the Government to consider and decide. When necessary, the Ministry of Industry and Trade shall cooperate with relevant ministries, agencies in reporting to Steering Committee for Price Regulation before reporting to the Government.

6. Adjustment to average electricity retail prices shall be so implemented to maintain transparency.

Article 4. Methods for developing average electricity retail prices

1. Average electricity retail prices shall be determined on the basis of electricity generation costs, purchase costs for electricity transmission, distribution - retail, load dispatch and market regulation services, costs of auxiliary services for electrical system, costs for industry coordination - management, other allocated costs, and only costs that directly serve electricity production and supply incurred by EVN to ensure operating capability, electricity supply, and investment demands under approved planning and on the basis of taking into account price deductibles as per the law.

2. Average electricity retail prices of year N (G_BQ) is determined using the formula below:

Where:

a) C_PĐ: Total costs for generation stage of year N (VND), determined using the formula below:

C_PĐ = C_TTĐ + C_ĐMT + C_BOT + C_TTN ⁺ C_NLTT + C_NK

Where:

C_TTĐ: Total electricity purchase costs of year N (VND) directly from power plants directly and indirectly engaged in electricity market;

C_ĐMT: Total costs and profits of year N (VND) from strategic multipurpose hydropower plants and other dependent keep-business-account units that have not engaged in competitive electricity market of EVN, where total costs are determined in accordance with regulations promulgated by the Ministry of Industry and Trade;

C_BOT: Total electricity purchase costs of year N (VND) from BOT power plants;

C_TTN: Total electricity purchase costs of year N (VND) from small-scale renewable energy power plants;

C_NLTT: Total electricity purchase costs of year N (VND) from power plants using renewable energy and new energy, including electricity storage system;

C_NK: Total electricity purchase costs of year N (VND) via electricity import;

b) C_DVPT: Total costs incurred by power plants providing auxiliary services for electrical system of year N (VND), including test run costs for power plants;

c) C_TT: Total purchase costs for electricity transmission services of year N (VND);

d) C_PP-BL: Total electricity distribution – retail costs and profit standards of year N (VND), including costs for mobilizing backup generators of electricity users to provide additional supply for national electrical system in case of emergency situations threatening electricity supply assurance;

đ) C_chung: Total industry coordination – management costs and profits of year N (VND);

e) C_ĐĐ: Total purchase costs for electrical system regulation and operation services and electricity market regulation services of year N (VND);

g) C_khac: Total other costs that have not been included in electricity prices, which are costs calculated but not included in electricity prices, include rate differences after evaluation that have not been allocated, rate differences that have not been recorded and paid to power plants in accordance with PPA, calculated and distributed to average electricity retail prices of year N (VND);

h) A_TP: Total commercial electrical production of year N (kWh).

3. Costs for purchasing electricity from the Seller shall conform to regulations on level-based electricity market operation promulgated by the Ministry of Industry and Trade and PPA signed by the Seller and the Buyer.

4. Electricity transmission service costs, electricity distribution - retail service costs, electrical system regulation and operation and electricity market operation service costs, costs incurred by power plants to provide auxiliary services for electrical system, industry operation - management costs determined by adding up costs and profits of electricity transmission, electricity distribution - retail, electrical system regulation and electricity market operation, power plants providing auxiliary services for electrical system, industry coordination - management of EVN shall conform to regulations promulgated by the Ministry of Industry and Trade for each level of electricity market. Price deductibles shall be determined on the basis of data under audited financial statement.

5. Standard profits of year N (LN_N) in calculation of average electricity retail prices (VND) of electricity distribution - retail; industry coordination - management; strategic multipurpose hydropower plants and other dependent keep-in-business power plants that have not engaged in competitive electricity market of EVN shall be determined using the formula below:

Where:

 : Equity (VND) of electricity distribution ; retail; industry coordination - management; strategic multipurpose hydropower plants and dependent keep-in-business power plants that have not engaged in competitive electricity market of EVN for electrical production and sale on December 31 (or June 30 if data is not available on December 31) of year N-1;

ROE_N : Return on equity (%) not lower than the average 6-month interbank rates posted on website of State Bank of Vietnam of the year N-2;

 : Corporate income tax rate in calculation of average electricity retail prices (%) according to Clause 1 Article 10 of the Law on Corporate Income Tax which is 20% and will be updated in case of amendment to corporate income tax laws.

Article 5. Annual adjustment to average electricity retail prices

1. On the basis of electricity supply and electrical system operation plan of year N promulgated by the Ministry of Industry and Trade, electrical production and sale costs of the year N-2 of EVN, estimated electrical production and sale results of the year N-1 (if electrical production and sale costs of the year N-1), before January 25 of the year N, EVN shall calculate average electricity retail prices using formula under Clause 2 Article 4 hereof, fulfill requirements pertaining to documents under Clause 2 of this Article, and:

a) Where average electricity retail prices drop by at least 1% relative to current average electricity retail prices, EVN has the responsibility to reduce average electricity retail prices accordingly. Within 5 working days from the date on which adjustment is made, EVN has the responsibility to file written reports to the Ministry of Industry and Trade;

b) Where average electricity retail prices increase by 2% to less than 5% relative to current average electricity retail prices, EVN shall submit average electricity retail price plans to the Ministry of Industry and Trade. Within 15 working days from the date on which Ministry of Industry and Trade receives average electricity retail price plans submitted by EVN, Ministry of Industry and Trade has the responsibility to respond in writing. EVN shall decide adjustment to average electricity retail prices after Ministry of Industry and Trade has responded. Within 5 working days from the date on which adjustment is made, EVN has the responsibility to file written reports to the Ministry of Industry and Trade;

c) Where average electricity retail prices increase by 5% to less than 10% relative to current average electricity retail prices, EVN may increase average electricity retail prices accordingly after reporting to and obtaining approval from the Ministry of Industry and Trade. Within 15 working days from the date on which the Ministry of Industry and Trade receives average electricity retail price plans submitted by the EVN, the Ministry of Industry and Trade has the responsibility to respond in writing to enable EVN to implement. Within 5 working days from the date on which adjustment is made, EVN has the responsibility to file written reports to the Ministry of Industry and Trade;

d) Where average electricity retail prices increase by at least 10% relative to current average electricity retail price, on the basis of average electricity retail price plans submitted by the EVN, the Ministry of Industry and Trade shall inspect, review, and solicit relevant ministries, agencies for feedback. On the basis of feedback of relevant ministries and agencies, the Ministry of Industry and Trade shall consolidate and report to the Government. When necessary, the Ministry of Industry and Trade shall cooperate with relevant ministries, agencies in reporting to Steering Committee for Price Regulation before reporting to the Government.

2. Annual average electricity retail price plans submitted by the EVN consist of:

a) Official Dispatch reporting annual average electricity retail price plans of EVN, which consists of analysis, evaluation of electrical production costs of all stages;

b) Attachments of the Official Dispatch reporting annual average electricity retail price plans of EVN include: rules in calculating costs of individual stages (electricity generation, electricity transmission, electricity distribution - retailing, electrical system regulation and electrical market operation, industry coordination - management), which include rules of estimating input parameters such as foreign exchange rates, domestic fuel costs and imported fuel costs, costs of power plants to enter operation in calculating year without PPA; schedules summarizing calculation results of each stage; schedules detailing calculation data of each stage; documents, files used as the basis for calculation; presentation of costs and unit prices used in calculation of estimated costs of year N of all stages (if any); presentation of electrical production and sale costs that have not been included in electricity retail prices but have been included in wholesale price of electricity production of which remaining balance is expected to be included in average electricity retail prices of year N; evaluation report on impact of electricity price adjustment to electricity purchase costs incurred by electricity users.

Article 6. Adjustment to average electricity retail prices in the year

1. Prior to the 25^th of the first month of the II Quarter, the III Quarter, and the IV Quarter, EVN shall determine commercial electrical production in practice of the previous quarter and total commercial electrical production accumulated since the beginning of the year, estimation of commercial electrical production of remaining months in the year; determination of electricity generation costs of the previous Quarter, electricity generation costs accumulated since the beginning of the year (including costs for purchasing electricity from power plants providing auxiliary services), estimation of costs of electricity generation stage of remaining months in the year based on basic input parameters in electricity generation, include other costs not included in average electricity retail prices in order to re-calculate average electricity retail prices using formula under Clause 2 Article 4 hereof (with other parameters unchanged), proceed with document requirements under Clause 2 of this Article, and proceed as follows:

a) Where average electricity retail prices drop by at least 1% relative to current average electricity retail prices, EVN has the responsibility to reduce average electricity retail prices accordingly. Within 5 working days from the date on which adjustment is made, EVN has the responsibility to file written reports to the Ministry of Industry and Trade;

b) Where average electricity retail prices increase by 2% to less than 5% relative to current average electricity retail prices, EVN shall submit average electricity retail price plans to the Ministry of Industry and Trade. Within 15 working days from the date on which Ministry of Industry and Trade receives average electricity retail price plans submitted by EVN, Ministry of Industry and Trade has the responsibility to respond in writing. EVN shall decide adjustment to average electricity retail prices after Ministry of Industry and Trade has responded. Within 5 working days from the date on which adjustment is made, EVN has the responsibility to file written reports to the Ministry of Industry and Trade;

c) Where average electricity retail prices increase by 5% to less than 10% relative to current average electricity retail prices, EVN may increase average electricity retail prices accordingly after reporting to and obtaining approval from the Ministry of Industry and Trade. Within 15 working days from the date on which the Ministry of Industry and Trade receives average electricity retail price plans submitted by the EVN, the Ministry of Industry and Trade has the responsibility to respond in writing to enable EVN to implement. Within 5 working days from the date on which adjustment is made, EVN has the responsibility to file written reports to the Ministry of Industry and Trade;

d) Where average electricity retail prices increase by at least 10% relative to current average electricity retail price, on the basis of average electricity retail price plans submitted by the EVN, the Ministry of Industry and Trade shall inspect, review, and solicit relevant ministries, agencies for feedback. On the basis of feedback of relevant ministries and agencies, the Ministry of Industry and Trade shall consolidate and report to the Government. When necessary, the Ministry of Industry and Trade shall cooperate with relevant ministries, agencies in reporting to Steering Committee for Price Regulation before reporting to the Government.

2. Average electricity retail price plans for the year submitted by the EVN consist of:

a) Official Dispatch reporting average electricity retail price plans in the year of EVN, which contains analysis and evaluation of costs for electricity generation stage of the previous Quarter;

b) Attachments of the Official Dispatch reporting average electricity retail price plans of EVN include: rules in calculating costs of electricity generation stage, which include rules of estimating input parameters such as foreign exchange rates, domestic fuel costs and imported fuel costs, costs of power plants to enter operation in calculating year without PPA; schedules summarizing calculation results and calculating data of electricity generation stage; documents, files used as the basis for calculation; presentation of costs and unit prices used in calculation of estimated costs of year N of generation stage (if any); presentation of electrical production and sale costs that have not been included in electricity retail prices but have been included in wholesale price of electricity production of which remaining balance is expected to be included in average electricity retail prices of year N; evaluation report on impact of electricity price adjustment to electricity purchase costs incurred by electricity users.

Article 7. Inspection of adjustment to average electricity retail prices

1. Where the EVN adjusts average electricity retail prices in accordance with Point a Clause 1 Article 5 and Point a Clause 1 Article 6 hereof or where EVN submits electricity retail price to the Ministry of Industry and Trade in accordance with Point d Clause 1 Article 5 and Point d Clause 1 Article 6 hereof, the Ministry of Industry and Trade shall take charge and cooperate with relevant ministries and agencies in reviewing reports and calculations made by the EVN.

2. Where average electricity retail prices must be decreased and the EVN fails to decrease average electricity retail prices, the Ministry of Industry and Trade has the responsibility to request the EVN to decrease average electricity retail prices accordingly.

The EVN has the responsibility to comply with request of the Ministry of Industry and Trade within 5 working days from the date on which they receive the request.

3. Where errors are found in calculation results under Point a Clause 1 Article 5 and Point a Clause 1 Article 6 hereof, the Ministry of Industry and Trade has the responsibility to request EVN to cease adjustment or re-adjust average electricity retail prices. The EVN has the responsibility to comply with request of the Ministry of Industry and Trade within 5 working days from the date on which they receive the request.

Section 2. INTERVAL FOR ADJUSTING AVERAGE ELECTRICITY RETAIL PRICES

Article 8. Interval for adjusting average electricity retail prices

Minimum interval between adjustment of average electricity retail prices shall be 3 months since the last adjustment to average electricity retail prices.

Chapter III

IMPLEMENTATION

Article 9. Organizing implementation

1. Ministry of Industry and Trade has the responsibility to:

a) guide EVN to calculate average electricity retail prices in accordance with Article 4 hereof;

b) take charge of examination under Article 7 hereof.

2. Related ministries and agencies have the responsibility to:

a) The Ministry of Industry and Trade has the responsibility to cooperate with Ministry of Industry and Trade implementing this Decree as price regulating authority;

b) Relevant ministries, agencies shall provide feedback, participate, and cooperate in relevant details within their jurisdiction, functions, and duties as per the law.

3. EVN has the responsibility to:

a) calculate average electricity retail prices in accordance with Article 4, Article 5, and Article 6 hereof and send reports on average electricity retail price plans to the Ministry of Industry and Trade;

b) adjust average electricity retail prices and send adjustment reports to competent authorities in accordance with Article 5 and Article 6 hereof.

Article 10. Entry into force

This Decree comes into force from the date of signing.