Power prices set to rise as hidden costs surface

Power prices set to rise as hidden costs surface

The Ministry of Industry and Trade has proposed adding previously unaccounted costs into retail electricity prices to help the Vietnam Electricity (EVN) to narrow losses and stabilise its finance.

Workers of Vietnam Electricity checks the power transmission system. — VNA/VNS Photo

The proposal is outlined in a draft decree amending Decree 72 on mechanisms for adjusting average retail electricity prices, currently under government consideration.

The amendment would allow reasonable and valid costs not fully reflected in past price adjustments— such as exchange rate differences and expenses directly related to power production and supply — to be included in future price reviews. These costs will be verified against EVN’s audited financial statements from 2022 onwards.

According to the ministry, EVN faced significant financial pressure after electricity purchasing costs surged due to geopolitical fluctuations and rising international fuel prices, resulting in accumulated losses of VNĐ50 trillion (roughly US$2 billion) in 2022–23. By the end of 2024, losses stood at approximately VNĐ44.8 trillion, severely affecting the efficiency of State capital within the group.

The ministry warned that without a mechanism to recover these costs, State capital will continue to erode, weakening EVN’s financial capacity and threatening national energy security.

Including reasonable costs in electricity prices will help power companies address financial challenges while maintaining transparency and feasibility, the ministry said.

This is likely to lead to higher average retail electricity prices in the coming period, placing pressure on households, production and businesses. Nonetheless, the ministry emphasised this step is necessary to safeguard the electricity sector’s financial health and ensure national energy security amid global market volatility.

Energy expert Hà Đăng Sơn noted that EVN’s audited financial reports for 2022, 2023 and 2024 do not detail the costs contributing to losses, raising concerns over potential inefficiencies in management, production, transmission and distribution.

Sơn stressed the need for EVN to provide detailed cost reports and that only reasonable expenses should be included in price calculations.

Currently, the average retail electricity price stands at VNĐ2,204.07 per kWh (excluding VAT), following a 4.8 per cent increase on May 10.

Bizhub