Decision No. 24/2011/QD-TTg On Adjusting Electricity Sales Prices Under Market Mechanism

Pursuant to …;

Regarding the adjustment of electricity sales prices under the market mechanism

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PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Electricity Law on December 3, 2004; Decree No. 105/2005/NĐ-CP dated August 17, 2005 of the Government detailing and guiding the implementation of certain provisions of the Electricity Law;

Pursuant to the Price Ordinance on April 26, 2002; Decree No. 170/2003/NĐ-CP dated December 25, 2003 of the Government detailing the implementation of certain provisions of the Price Ordinance; Decree No. 75/2008/NĐ-CP dated June 9, 2008 of the Government amending and supplementing some articles of Decree No. 170/2003/NĐ-CP dated December 25, 2003 of the Government detailing the implementation of certain provisions of the Price Ordinance;

Pursuant to Resolution No. 11/NQ-CP dated February 24, 2011 of the Government on key measures to focus on curbing inflation, stabilizing macroeconomic conditions, and ensuring social welfare;

Considering the proposal of the Minister of Industry and Trade,

DECISION:

Article 1. Scope of Regulation

This Decision regulates the adjustment of electricity sales prices under the market mechanism.

Article 2. Applicability

This Decision applies to organizations and individuals participating in power activities and using electricity.

Article 3. Explanation of Terms

In this Decision, the following terms shall be understood as follows:

1. Average electricity sales price is the price determined according to the principle of averaging for 1 kWh of commercial electricity, including four components: Power generation price, transmission price, distribution price, operating and management costs and ancillary services of the power system; hereinafter referred to as the electricity sales price.

2. Current electricity sales price is the price currently applied as the basis for calculating the next adjustment.

3. Electricity price stabilization fund is the fund established to implement the goal of stabilizing electricity sales prices.

4. Basic input parameters are factors directly affecting power generation costs that power generation units cannot control, including: Fuel prices, foreign exchange rates, and power generation production structure.

Article 4. Principles for adjusting electricity sales prices under the market mechanism

1. Within the fiscal year, the electricity sales price may only be adjusted when basic input parameters fluctuate compared to those used to determine the current electricity sales price. Other input parameters of the electricity sales price will only be considered for adjustment after the final report and audit have been conducted as prescribed.

2. The minimum time interval between two consecutive adjustments of the electricity sales price is three months.

3. Adjustments to the electricity sales price under the market mechanism must be carried out openly and transparently. In necessary cases, the State shall use the Electricity Price Stabilization Fund and other measures to stabilize electricity sales prices to minimize adverse impacts on macroeconomic stability and social welfare.

Article 5. Mechanism and authority for adjusting electricity sales prices

1. If fuel prices and foreign exchange rates at the time of calculation fluctuate compared to those used to determine the current electricity sales price, and the power generation production structure changes from the approved power generation plan by the Ministry of Industry and Trade, resulting in the calculated electricity sales price being reduced by 5% or more compared to the current electricity sales price, Vietnam Electricity Corporation shall decide to adjust the electricity sales price accordingly, while reporting to the Ministry of Industry and Trade and the Ministry of Finance for supervision.

2. If fuel prices and foreign exchange rates at the time of calculation fluctuate compared to those used to determine the current electricity sales price, and the power generation production structure changes from the approved power generation plan by the Ministry of Industry and Trade, resulting in the calculated electricity sales price increasing compared to the current electricity sales price at the following levels:

a) 5%, Vietnam Electricity Corporation is permitted to adjust the electricity sales price by the corresponding amount after registering and obtaining approval from the Ministry of Industry and Trade. Within five working days, the Ministry of Industry and Trade has the responsibility to respond to allow Vietnam Electricity Corporation to implement the adjustment. If the Ministry of Industry and Trade does not provide a response within five working days, Vietnam Electricity Corporation is allowed to increase the electricity sales price by 5% and report to the Ministry of Industry and Trade and the Ministry of Finance for supervision.

b) More than 5%, Vietnam Electricity Corporation shall report to the Ministry of Industry and Trade and submit to the Ministry of Finance for review. Within five working days from receiving the report from Vietnam Electricity Corporation, the Ministry of Finance has the responsibility to review and send its review opinion to the Ministry of Industry and Trade. The Ministry of Industry and Trade has the responsibility to compile and submit to the Prime Minister for consideration and approval within five working days from receiving the review opinion of the Ministry of Finance.

After fifteen working days from the date the Ministry of Industry and Trade submits to the Prime Minister without receiving a reply, Vietnam Electricity Corporation is allowed to adjust the electricity sales price by 5%.

3. Annually, after receiving the final report and independent audit as prescribed, Vietnam Electricity Corporation shall report to the Ministry of Industry and Trade and the Ministry of Finance the production and business cost of power generation, transmission, distribution, operation and management, and ancillary services of the power system, and the electricity sales price for the fiscal year.

4. Based on the final report, audit results, and the implementation of economic and technical indicators of Vietnam Electricity Corporation, the Ministry of Industry and Trade shall take the lead and coordinate with the Ministry of Finance to verify and confirm the production and business cost of the fiscal year and publicly announce the results. On this basis, the Ministry of Industry and Trade shall take the lead and coordinate with the Ministry of Finance to decide on the adjustment of the electricity sales price and the allocation of the Electricity Price Stabilization Fund as prescribed. If exceeding authority, it shall report to the Prime Minister.

Article 6. Electricity Price Stabilization Fund

1. The Electricity Price Stabilization Fund is established to achieve the goal of stabilizing electricity selling prices.

2. The sources for forming the Electricity Price Stabilization Fund are extracted from electricity selling prices and are included in the production and business costs of electricity.

Article 7. Inspection and Supervision of Electricity Selling Price Adjustments

1. The Ministry of Industry and Trade inspects and supervises the implementation of electricity selling price adjustments. In necessary cases, the Ministry of Industry and Trade may issue documents requesting Vietnam Electricity to temporarily halt increases in electricity selling prices or adjust for the next price adjustment. The Ministry of Industry and Trade has the authority to invite independent consultants to review the price adjustment files.

2. The Ministry of Finance monitors the implementation of electricity selling price adjustments; participates and collaborates with the Ministry of Industry and Trade to inspect reasonable and valid cost differences compared to the calculation data in the electricity selling price plan after final accounting and auditing figures are available.

Article 8. Implementation organization

1. The Ministry of Industry and Trade shall be responsible for:

a) Guide the detailed implementation of electricity selling price schedules for different customer groups.

b) Approve annual electricity production plans and economic-technical indicators.

c) Lead and coordinate with the Ministry of Finance to establish regulations on operating and management costs and system ancillary services; publicly disclose annual electricity production and business costs.

d) Resolve issues within their authority during the process of establishing, adjusting, and implementing electricity selling prices.

đ) Guide the calculation of electricity selling prices based on basic input parameters.

e) Guide the preparation and approval of price adjustment calculation files.

g) Issue other necessary guidelines to implement this Decision.

2. The Ministry of Finance shall be responsible for:

a) Lead and coordinate with the Ministry of Industry and Trade to guide the mechanism for forming, managing, and using the Electricity Price Stabilization Fund.

b) Review the price adjustment plans according to Article 5 of this Decision.

3. The Vietnam Electricity Group shall have the responsibility:

a) Implement electricity selling price adjustments within their authority and in accordance with the provisions of Clause 1, Article 5, Point a, Clause 2, Article 5 of this Decision.

b) Report to the Ministry of Industry and Trade to submit to the Prime Minister for electricity selling price adjustments in accordance with the provisions of Point b, Clause 2, Article 5 of this Decision.

c) Report to the Ministry of Industry and Trade and the Ministry of Finance on electricity production and business costs and electricity selling prices in accordance with the provisions of Clause 3, Article 5 of this Decision.

Article 9. Effective Date

1. This Decision takes effect from June 1, 2011.

2. Any organization or individual violating the provisions of this Decision shall be subject to penalties according to the regulations on administrative sanctions in the field of electricity or criminal liability according to the law, depending on the nature and severity of the violation.

3. Ministers, heads of ministerial-level agencies, heads of government-affiliated agencies, leaders of power units, and related organizations are responsible for enforcing this Decision./.