The Ministry of Industry and Trade has proposed electricity price adjustments every two months. (Photo: VNA)

Under the draft decree on the electricity price adjustment mechanism, authorities will consider adjustments whenever production costs fluctuate by 2% or more, down from the current 3% threshold.

At a regular press conference on January 7, Nguyen Quang Minh, head of the Electricity Market Department under the Electricity Regulatory Authority, explained that the proposed adjustment aligns with efforts to ensure electricity prices reflect market conditions more accurately.

Deputy Minister Nguyen Sinh Nhat Tan highlighted that the decree is being drafted to implement the amended Electricity Law, passed by the National Assembly in late November 2024.

According to the law, electricity retail prices must reflect real-time fluctuations in production input costs. This mechanism ensures cost recovery with reasonable profits, allowing electricity companies to maintain and expand their capital for sustainable operations.

The Ministry of Industry and Trade emphasised that the proposal adheres to the Government's directive to avoid sudden and irregular adjustments in electricity pricing. The ministry noted that input costs for electricity production — particularly oil, gas and coal — often experience significant short-term volatility, necessitating more frequent adjustments to prevent abrupt price hikes.

However, analysts warn that adjusting electricity prices every two months could pose challenges for businesses in budgeting and cost management. Electricity typically accounts for 4-10% of production costs, depending on the size and industry of the business.