Ensuring harmony and transparency in electricity price regulation

Price affects all citizens and enterprises directly and plays a key role in market stabilisation. Hence, it should be specified in law to ensure openness and transparency.
Engineers at the Ho Chi Minh City Load Dispatch Centre.
Engineers at the Ho Chi Minh City Load Dispatch Centre.

Recently, amendments to the Law on Price have been put on the table at the National Assembly. One of the key issues under debate is the scope of government regulation.

The draft law has eliminated obstructive regulations to make state management of prices more transparent, more consistent with the legal system, and more aligned with international practices. The draft law is revised to show the market principle clearly in price management.

A notable point is that many suggested the need for mechanisms and regulations on resources to regulate prices, including electricity prices, when necessary. Many argued for keeping electricity on the price stabilisation list to cope with rising prices in reality. However, many experts said that stabilising electricity prices would contradict many existing laws.

According to the 2012 Law on Prices, electricity is among the goods whose prices are determined by the government and subject to price stabilisation.

In principle, pricing is the strongest measure of the state to achieve the goals of preventing monopoly and encouraging production and business and stabilising people’s lives.

Whereas price stabilisation is a less powerful measure to maintain the stable prices of goods and services in unusual situations.

However, besides production costs, Article 30 of the Law on Electrical Power states that when the state determines the prices of electricity, it must also consider the country’s socio-economic development conditions and the people’s incomes in each period to ensure living standards and create incentives for production.

In the past ten years of implementing the 2012 Law on Prices, the issue of electricity price stabilisation has not arisen because the state already considered harmonising the interests of the parties, reducing impacts on socio-economic development and people’s lives when setting prices.

On the other hand, when necessary, the state can still use other policies to support without resorting to price stabilisation measures.

Therefore, measures to stabilise electricity prices are no longer necessary nor suitable when managed under the state pricing mechanism.

Based on this assessment, the amended Law on Prices has removed electricity from the list of goods and services subject to price stabilisation and electricity prices will continue to be managed under the state pricing mechanism. This change aims to avoid overlapping scope of implementing price management and regulation measures.

At the same time, maintaining the electricity pricing mechanism still meets the requirements of state management on prices as well as other goals of socio-economic development and stabilising people’s lives.

NDO/Song Tra