Circular No. 02/2017/TT-BCT stipulates the method, procedure for establishing, reviewing, and approving transmission electricity prices.

MINISTRY OF INDUSTRY AND TRADE -------	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------------
Number: 02/2017/TT-BCT	Hanoi, on 10 the 02 2017

CIRCULAR

REGULATIONS ON METHODS, PROCEDURES FOR ESTABLISHING, REVIEWING AND APPROVING ELECTRICITY TRANSMISSION PRICES

Pursuant to Decree No. 95/2012/NĐ-CP dated November 12, 2012, of the Government, detailing the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Electricity Law dated December 3, 2004; and the Law Amending and Supplementing Certain Provisions of the Electricity Law dated November 20, 2012;

Based on Decree No. 137/2013/NĐ-CP dated October 21, 2013, issued by the Government, detailing the implementation of certain provisions of the Electricity Law and the Law Amending and Supplementing Certain Provisions of the Electricity Law;

At the proposal of the Director of the Electricity Regulatory Authority,

The Minister of Industry and Trade issues the Circular stipulating methods, procedures for establishing, reviewing and approving electricity transmission prices.June 2024; Electricity transmission prices.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

Article 1. This Circular stipulates methods, procedures for establishing, reviewing and approving electricity transmission prices.

Article 2. This Circular applies to Vietnam Electricity Corporation, National Power Transmission Corporation, System Operation Units and Electricity Market, Electricity Trading Company, Power Corporations and customers purchasing electricity directly from the transmission grid.

Article 2. Interpretation of Terms

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

1. Point of electricity delivery is the point of electricity delivery between National Power Transmission Corporation and Power Corporations and customers purchasing electricity directly from the transmission grid.

2. System Operator and Market Operator is the unit commanding and controlling the process of power generation, transmission, distribution in the national power system, managing electricity market transactions.

3. Entity responsible for paying transmission costs is the Electricity Trading Company, Power Corporations and customers purchasing electricity directly from the transmission grid.

4. Year N is the calendar year from January 1 to December 31 of the year the price is applied.

5. Year N-1 is the Gregorian calendar year immediately preceding Year N |||.

6. Year N-2 is the Gregorian calendar year immediately preceding Year - Estimated cost table for purchasing rooftop solar power in year1.

7. CPI is the consumer price index published by the General Statistics Office.

8. Transmission assets include transmission grids, construction works and auxiliary equipment used for transmission activities owned by National Power Transmission Corporation.Supplement

Chapter II

METHODS FOR DETERMINING TRANSMISSION PRICES

Article 3. Methods for determining transmission prices

Clause 1. Annual transmission prices apply uniformly nationwide without depending on transmission distance and delivery points.

Clause 2. Transmission prices are determined annually based on the principle of ensuring recovery of legitimate costs and allowing profit to operate the transmission grid at specified quality and meet financial targets for investment and development of the transmission grid.

Clause 3. Transmission price in Year N () is determined based on the total allowable transmission revenue of National Power Transmission Corporation and the estimated total electricity volume transmitted in Year , calculated according to the following formula: N ||| of Total allowable transmission revenue of National Power Transmission Corporation in Year N |||(VND);

Where:

 Estimated total electricity volume transmitted in Year N ||| Article 4. Method for determining total allowable annual transmission revenue

), operating and maintenance costs allowed ( N ||| 4. Costs of purchasing transmission services, costs of purchasing distribution-retail electricity services, costs of purchasing system operation and dispatch services, costs of power plants providing system ancillary services, industry management and operation costs are determined based on costs plus regulated profit margins of the transmission, distribution-retail electricity, system operation and dispatch, and industry management and operation stages of the Vietnam Electricity Corporation according to levels of the electricity market as prescribed by the Ministry of Industry and Trade. Cost reductions are determined based on data from audited financial reports.

: Total allowable transmission capital cost in Year

Estimated total electricity volume transmitted in Year N ||| (including allowable capital cost components (: Total allowable transmission operating and maintenance cost) and revenue adjustment amount for the year N |||, determined as follows:

Where:

: Revenue adjustment amount in Year N ||| Article 4. Method for determining total allowable annual transmission revenue

including expected deposit interest income of National Power Transmission Corporation in Year year N ||| Article 4. Method for determining total allowable annual transmission revenue

(determined by deposit interest rate of Year N ||| ), income from asset disposal, sales of fixed assets, materials and equipment in Year Article 5. Method for determining total allowable transmission capital cost N ||| Clause 1. Total allowable transmission capital cost in Year , excluding abnormal one-off costs in year: Total allowable depreciation expense of fixed assets in Year N ||| (based on the plan for the liquidation and sale of assets and materials and equipment for the year N |||).

(VND);

: Total expected financial cost including short-term, long-term loans, bonds, financial leasing and fees for borrowing to be paid in Year N ||| (VL

Where:

for transmission assets (VND);councillORSa) Trip tickets are printed with face values corresponding to the amount charged for one-time use of the service for each type of vehicle;itself Exchange rate difference expected to arise from foreign currency debt repayment in Year N ||| : Expected exchange rate revaluation difference in Yearồ: Expected allocation amount in Year N of previous years' undistributed exchange rate loss;

: Expected allowable transmission profit in Year (VND). N ||| ) is determined according to the regulations on useful life and depreciation method of fixed assets by the Ministry of Finance.

: Clause 3. Total expected financial cost in Year N ( blogo) is determined according to credit contracts, financial leasing contracts of transmission assets. N ||| including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

Clause 4. Expected allocation amount in Year N ||| including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

of previous years' undistributed exchange rate loss ( ) is determined according to the regulations of competent authorities,

LN_{N |||}organizations. N ||| Clause 5. Expected allowable transmission profit in Year N (

2. Estimated total depreciation cost of fixed assets for year N ||| () is determined according to the formula : Shareholders' equity as of June 30, Year N-1 (VND);

: Pre-tax profit margin on shareholders' equity in Year N applicable to National Power Transmission Corporation (%), determined according to retail electricity pricing plan or decision of competent authority.shall be determined according to the credit contracts and financial lease contracts for transmission assets.

4. Expected foreign exchange rate difference arising from repayment of foreign currency loans for year N ||| (shall be determined in accordance with the financial accounting regulations.

5. Expected revaluation foreign exchange rate difference for year N ||| (shall be determined in accordance with the financial accounting regulations.

6. Estimated allocation amount for the year N ||| of the undistributed foreign exchange loss difference from previous years () shall be determined in accordance with the provisions of the competent authority, organization having jurisdiction.

7. Estimated allowable profit for year N (LN_{N |||}) shall be determined according to the formula as follows:

Where:

: Shareholders' equity as of June 30, year N-1 (VND);

TNDN_{N |||}: Pre-tax profit margin on shareholders' equity for year N applicable to the National Transmission Corporation (%), which shall be determined based on the retail electricity price plan or the decision of the competent authority.

Article 6. Method for determining the total allowable operating and maintenance costs for power transmission

1. Total permitted operating and maintenance costs for power transmission in year N (VL

Where:

: Total material cost expected for the year N ||| including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

: Total labor cost expected for the year N ||| including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

: Total major repair cost expected for the year N ||| including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

: Total external service cost expected for the year N ||| including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

: Total other monetary cost expected for the year N ||| Clause 5. Expected allowable transmission profit in Year N (

2. Method for Determining Material Cost

a) Total material cost expected for the year N ||| () includes material costs within the standard and emergency material costs, specifically as follows:

- Standard material costs include: Lubricating oil costs, machine oil costs, materials, tools, equipment directly and indirectly for workshops, testing work, materials for regular maintenance and repair, materials, tools, equipment, machines, office supplies for management, operation, and maintenance of transmission lines, substations, transformers, office work, agency work, and other related costs determined according to the standards set by authorized agencies and organizations;

- Emergency material costs are the material costs used for abnormal and objective incidents, determined according to the regulations of Vietnam Electricity Corporation

b) Total material cost expected for the year N ||| are determined according to the following formula:

Where:

: Expected annual transmission electricity output (kWh); N ||| : Material cost standard determined according to the regulations of authorized agencies and organizations (đ/kWh);

ĐG_VL: Inflation index for the year taken from the Consumer Price Index (CPI) for the year

but not exceeding N ||| 2.5% (%); , excluding abnormal one-off costs in year : Expected emergency material costs for the year 3. Method for determining labor costs

a) Total labor cost expected for the year N ||| Clause 5. Expected allowable transmission profit in Year N (

) of the National Power Transmission Corporation including total labor costs and costs with wage characteristics;

b) Labor costs are determined according to the laws on labor management, wages, and bonuses for employees and wages, bonuses, and allowances for managers in limited liability companies wholly owned by the State; N ||| (c) Costs with wage characteristics include: Safety allowances, health insurance, social insurance, unemployment insurance, and trade union fees, determined according to relevant laws; ) includes costs for services

for major repair works serving power transmission, determined according to the standards set by authorized agencies and organizations.in- Costsinả for organizations and individuals outside the unit providing the following services: Electricity, water, telephone, telecommunications, books and newspapers;

- Consulting audit costs; - Asset rental costs;

4. Method for Determining Major Repair Costs

Estimated major repair cost for year N ||| (- Asset insurance costs; - Other service costs under contracts for services to support management, operation, and maintenance of substations and transmission lines.

5. Method for Determining External Service Costs

a) Estimated total cost of purchased services for year N ||| () including:

: External service cost standard determined according to the regulations of trauthorized agencies and organizations (đ/kWh);

determined according to Point b Clause

2 of this Article (%).

a) Total other monetary costs for the year

) include: Other monetary costs within the standard, emergency other monetary costs, taxes, fees, charges, land rent, and meal allowance costs;

b) Estimated total cost of purchased services for year N ||| are determined according to the following formula:

Where:

: Expected annual transmission electricity output (kWh); N ||| : Material cost standard determined according to the regulations of authorized agencies and organizations (đ/kWh);

ĐG_BTKb) Total other monetary costs for the year : Standard other monetary cost determined according to the regulations of

but not exceeding N ||| authorized agencies and organizations (đ/kWh); determined according to Point b Clause 2 of this Article (%);

6. Method for Determining Other Monetary Costs

: Emergency other monetary costs for the year N ||| (: Taxes, fees, charges, and land rent for the year

: Meal allowance costs for the year N ||| are determined according to the following formula:

Where:

: Expected annual transmission electricity output (kWh); N ||| : Material cost standard determined according to the regulations of authorized agencies and organizations (đ/kWh);

ĐG_K c) Standard other monetary costs for the year include: Travel expenses; conference and reception expenses; training expenses; scientific research, innovation, and improvement expenses; civil defense, security, flood prevention, fire prevention and extinguishing expenses; occupational safety and health, work attire, industrial hygiene, and environmental protection expenses; drinking water during working hours, night shift and hazardous substance allowances; first aid expenses for workplace accidents, common medical expenses, functional recovery for workers, and recruitment expenses;

but not exceeding N ||| d) Emergency other monetary costs for the year

) are monetary costs used for abnormal and objective incidents, determined according to the regulations of Vietnam Electricity Corporation; N ||| including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

e) Taxes, fees, charges, and land rent for the year N ||| including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

) are determined based on implementation in the year N ||| Clause 5. Expected allowable transmission profit in Year N (

f) Meal allowance costs for the year N ||| ) are determined according to current regulations.

PROCEDURE FOR ESTABLISHING, REVIEWING AND APPROVING POWER TRANSMISSION PRICES N ||| (is the monetary expense for other extraordinary and objective incidents as stipulated by the Vietnam Electricity Group;

d) Taxes, fees, charges, and land rental payments for the year N ||| () shall be determined based on actual implementation during the year , excluding abnormal one-off costs in year;

e) Meal expenses for the year N ||| () shall be determined in accordance with current regulations.Supplement

Chapter

III

PROCEDURE FOR ESTABLISHING, REVIEWING AND APPROVING TRANSMISSION PRICES

Article 7. Procedures for Establishing, Reviewing, and Approving Transmission Tariffs

1. The National Power Transmission Corporation shall be responsible for establishing transmission tariffs for year N, submitting them to the Vietnam Electricity Group for approval, and sending a copy of the report to the Electricity Regulatory Authority for information.

2. Before November 15 each year (year - Estimated cost table for purchasing rooftop solar power in year1), the Vietnam Electricity Group shall be responsible for submitting the transmission tariff review to the Electricity Regulatory Authority for review and submission to the Minister of Industry and Trade for approval.in3. The Electricity Regulatory Authority shall be responsible for reviewing the transmission tariff dossier and may use consultants to review the transmission tariff dossier if necessary. In cases where the transmission tariff dossier does not comply with the provisions of Article 8 of this Circular, the Vietnam Electricity Group shall be responsible for completing and supplementing within five working days from the date of receipt of the request from the Electricity Regulatory Authority. N |||.

4. Before December 5 each year (yearn l), the Electricity Regulatory Authority shall be responsible for submitting a report on the review of transmission tariffs for year N to the Minister of Industry and Trade. 5. Before December 15 each year (year无效), the Minister of Industry and Trade shall approve the transmission tariffs for year N.

Article 8. Dossier for Transmission Tariffs N-11. Petition for Approval of Transmission Tariffs for Year

2. Explanation and Calculation Tables for Transmission Tariffs for Year N-1a) Analysis and Evaluation of the Implementation of Transmission Volume Indicators, Transmission Loss Rates, Revenue Realization, and Costs for Year

Analysis and Evaluation of Profit Realization, Shareholder Equity, and Financial Indicators such as Return on Shareholder Equity, Capital Structure, Self-Investment Rate, and Debt Repayment Ratio as of June 30 of Year

b) Explanation and Calculation of Total Permitted Capital Costs for Year N |||.

of the National Power Transmission Corporation, including: N |||, including:

and detailed depreciation cost calculation table according to each type of fixed asset in Yearand 20 billion VND at the rate of 4.9%/year, and thus, Commercial Bank A - Estimated Shareholder Equity at the end of Year - Estimated cost table for purchasing rooftop solar power in year1; and forecast for Year无效 Explanation and detailed calculation of changes in shareholder equity for Year - Estimated cost table for purchasing rooftop solar power in year1;

- Profit, Return on Shareholder Equity, Self-Investment Rate, and Forecasted Debt Repayment Rate for Year N ||| (c) Explanation and Calculation of Total Permitted Operating and Maintenance Costs for Year

- Annual total depreciation cost N |||: Summary table of depreciation of fixed assets for year N ||| of the National Power Transmission Corporation, including: N |||;

- Total financial expenses and exchange rate differences for the year N |||: Detailed calculation table of financial costs, detailed interest expenses, and exchange rate differences during the year N |||;

: Explanation and calculation of material costs estimated for Year - Estimated cost table for purchasing rooftop solar power in year1 and forecast for Year N |||: in accordance with Clause 2, Article 6 of this Circular; - Estimated cost table for purchasing rooftop solar power in year1 and year N |||;

: Explanation and calculation of labor costs in accordance with Clause 3, Article 6 of this Circular;and 20 billion VND at the rate of 4.9%/year, and thus, Commercial Bank A in accordance with Clause 4, Article 6 of this Circular;and 20 billion VND at the rate of 4.9%/year, and thus, Commercial Bank A : Explanation and calculation of external service costs according to categories estimated for Year N |||.

in accordance with Clause 5, Article 6 of this Circular; N ||| (: Explanation and calculation of other monetary costs estimated for Year in accordance with Clause 6, Article 6 of this Circular.

- Total material costs for the year N |||d) Explanation and Calculation of Total Permitted Transmission Revenue for Year N. - Estimated cost table for purchasing rooftop solar power in year1 (monthly) consistent with the National Power Development Plan and the annual grid expansion plan of the National Power Transmission Corporation that has been approved; N ||| c) List of Major Fixed Asset Repair Projects for Year

- Total labor costs for the year N |||Article 9. Payment for Transmission Services Contracts

- Total major repair costs for the year N |||: Explanation and calculation table of major repair costs during the year N ||| The Vietnam Electricity Group or the Electricity Trading Company, the Electricity Corporation, and direct electricity customers purchasing from the transmission grid shall be responsible for paying the transmission costs to the National Power Transmission Corporation in accordance with signed contracts.

- Total external service costs for the year N |||: Explanation and calculation table of external service procurement costs according to the estimated actual implementation items for the year - Estimated cost table for purchasing rooftop solar power in year1 (monthly) consistent with the National Power Development Plan and the annual grid expansion plan of the National Power Transmission Corporation that has been approved; N ||| as prescribed in Clause 5, Article 6 of this Circular;

- Total other monetary costs for the year N |||: Explanation and calculation table of other monetary expenses estimated to be implemented for the year - Estimated cost table for purchasing rooftop solar power in year1 and expected for year N ||| as prescribed in Clause 6, Article 6 of this Circular.

d) Explanation and calculation of total permitted transmission revenue for year N.

3. The accompanying documents include:

a) List and value of completed investment projects, expected to be put into operation by December 31 of year - Estimated cost table for purchasing rooftop solar power in year1 and year N ||| (monthly) consistent with the National Power Development Plan and the annual grid expansion plan of the National Transmission Corporation that has been approved;

b) Summary table of workforce for the year - Estimated cost table for purchasing rooftop solar power in year1 and plan for year N |||;

c) List of major fixed asset repair items for the year12. Leather shoesthe valuation of fixed assets for the year - Estimated cost table for purchasing rooftop solar power in year1 and expected for year N |||;

d) Financial statements for the year , excluding abnormal one-off costs in year audited by an independent auditing agency: Balance sheet, income statement, cash flow statement, notes to the financial statements;

5. The dossier for electricity transmission service prices shall be prepared in paper form and electronic message format, which has the same legal effect as a written document according to the law. The Electricity Transmission Unit shall be responsible for directly sending one set of the dossier in electronic message format and one set in paper form (if necessary) to the State Management Agency for Electricity.

Chapter IV

IMPLEMENTATION

Article 9. Payment of Transmission Service Contracts

The Vietnam Electricity Group or the Electricity Trading Corporation, the Electricity Corporation, and direct electricity purchasers from the transmission grid are responsible for paying the transmission costs to the National Transmission Corporation in accordance with signed contracts.

Article 10. Responsibilities of Related Units

1. The Electricity Regulatory Authority shall be responsible for guiding, inspecting the implementation of this Circular, and resolving disputes arising therefrom.

2. The Vietnam Electricity Corporation shall be responsible for directing the National Power Transmission Corporation to establish the annual transmission electricity price in accordance with the provisions of this Circular.

3. The National Power Transmission Corporation shall be responsible for establishing the annual transmission electricity price, submitting it to the Vietnam Electricity Corporation, and reporting to the Electricity Regulatory Authority in accordance with the provisions of this Circular.

Article 11. Effective Date

1. This Circular takes effect from March 27, 2017. Circular No. 14/2010/TT-BCT dated April 15, 2010, issued by the Minister of Industry and Trade, which stipulates the method of establishment, procedures, and processes for drafting, promulgating, and managing the transmission electricity price; and Circular No. 03/2012/TT-BCT dated January 19, 2012, issued by the Minister of Industry and Trade, amending and supplementing certain articles of Circular No. 14/2010/TT-BCT dated April 15, 2010, issued by the Minister of Industry and Trade, which stipulates the method of establishment, procedures, and processes for drafting, promulgating, and managing the transmission electricity price, shall cease to be effective from the date this Circular takes effect.

2. Within fifteen days from the date this Circular takes effect, the Vietnam Electricity Corporation shall submit the 2017 transmission electricity price dossier in accordance with the provisions of this Circular. as prescribed in this Circular.

Place of Receipt: - Prime Minister, Deputy Prime Ministers; - Ministries, Agencies equivalent to Ministries, Agencies under the Government; - Provincial and municipal People's Committees directly under the central government; - Supreme People's Procuracy; - T3cm Supreme People's Court; - State Audit Agency; - Ministers and Deputy Ministers; - Legal Documents Supervision Bureau (Ministry of Justice); - Official Gazette; - Government website; - Ministry of Industry and Trade website; - Vietnam Electricity Corporation; - National Power Transmission Corporation; - National Power System Dispatch Center; - Electricity Purchasing and Selling Company; - Electricity Corporations; - VT, Electricity Regulatory Authority, PC.

THE MINISTER Tran Tuan Anh