Circular No. 03/2012/TT-BCT amending and supplementing certain provisions of Circular No. 14/2010/TT-BCT dated April 15, 2010, of the Ministry of Industry and Trade on the method for establishing, procedures, and management of transmission electricity pricing.

CIRCULAR

Amending and supplementing some articles of Circular No. 14/2010/TT-BCT dated April 15, 2010 of the Ministry of Industry and Trade regarding the method for establishing, procedures, formalities for drafting, promulgating, and managing transmission electricity prices.

Decree No. 44/2011/NĐ-CP dated June 14, 2011 of the Government amends and supplements Article 3 of Decree No. 189/2007/NĐ-CP dated December 27, 2007 of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

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Pursuant to Decree No. 189/2007/ND-CP dated December 27, 2007, issued by the Government, detailing the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

Pursuant to 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 Electricity Law dated December 3, 2004;

The Minister of Industry and Trade amends and supplements some articles of Circular No. 14/2010/TT-BCT dated April 15, 2010 of the Ministry of Industry and Trade stipulating the method for establishing, procedures, formalities for drafting, promulgating, and managing transmission electricity prices as follows:

Amending and supplementing some articles of Circular No. 14/2010/TT-BCT dated April 15, 2010 of the Ministry of Industry and Trade stipulating the method for establishing, procedures, formalities for drafting, promulgating, and managing transmission electricity prices (hereinafter referred to as Circular No. 14/2010/TT-BCT) as follows:

Article 1. Amending Clause 2 as follows:

1. a) Repealing Clause 7 and Clause 10;

b) Amending Clause 8, Clause 9, and Clause 12 as follows:

“8. Year N is the calendar year from January 1 to December 31.

9. Year N-1 is the calendar year immediately preceding Year N.

12. Maximum transfer capacity is the maximum transfer capacity of all transfer points of a unit required to pay transmission costs during the period from January 1 to December 31 of Year N.”

Amending Clause 3 of Article 3 as follows:

2. “Article 3. Principles for determining average transmission electricity prices

3. Average transmission electricity price in Year N

shall be determined based on the permitted total transmission revenue of the National Transmission Corporation in Year N and the total electricity transferred by the National Transmission Corporation to units required to pay transmission costs at all transfer points, calculated according to the following formula: : Total permitted transmission revenue of the National Transmission Corporation in Year N (VND);

Where:

  : Forecasted total electricity transferred by unit i at all transfer points in Year N (kWh);

 n: Number of units required to pay transmission costs.”

Amending Article 4 as follows:

3. “Article 4. Method for determining annual permitted total transmission revenue

and components of transmission revenue adjustment for Year N-1 (

The permitted total revenue for electricity transmission for year N includes permitted capital cost components , allowable operational and maintenance costs : Total permitted capital cost of transmission in Year N of the National Transmission Corporation (VND);), is determined according to the following formula:

Where:

  : Total permitted operating and maintenance cost of transmission in Year N of the National Transmission Corporation (VND);

: Amount of the difference between costs and revenues of transmission electricity in Year N-1 adjusted into the total permitted transmission revenue in Year N (VND), determined according to the method prescribed in Clause 9, Article 1 of this Circular.”

  Amending the explanation of the symbol “V

4. CSH,N_{” in Clause 4 of Article 5 as follows:}“V

: Average of the owner's equity as of December 31, Year N-1 and estimated owner's equity as of December 31, Year N (VND).”_{” in Clause 4 of Article 5 as follows:}a) Amending Subpoint d Clause 2 as follows:

5. Amend Article 6 as follows:

“d) Quantity of transmission lines, number of circuit breakers, and total transformer capacity forecasted for Year N at each voltage level shall be determined based on actual quantity implemented up to December 31, Year N-1, additional quantity implemented up to March 31, Year N, and forecasted additional quantity for Year N.”

“b) Labor costs shall be determined according to Circular No. 27/2010/TT-BLDTBXH dated September 14, 2010 of the Ministry of Labor, Invalids, and Social Affairs guiding the management of labor, wages, bonuses, and rewards in state-owned joint stock companies, subsequent guidance documents replacing or supplementing it, and other relevant regulations.”

b) Amend point b of Clause 3 as follows:

c) Amending Subpoint b Clause 5 as follows:

“b) Total external service costs in Year N shall be determined based on the forecasted demand for external services in Year N, based on actual costs incurred in Year N-1 (in external service contracts and external service costs) and costs incurred up to March 31, Year N.”

d) Amending Subpoint b Clause 6 as follows:

“b) Total other monetary costs in Year N shall be determined based on the forecasted costs in Year N, based on actual costs incurred in Year N-1 and costs incurred up to March 31, Year N.”

Amending Clause 2 and Clause 4 of Article 7 as follows:

6. “Article 7. Method for determining annual transmission electricity prices for units required to pay transmission costs

2. Transmission costs paid by the i-th unit required to pay transmission costs in Year N (TC

= TC_{is the total distribution-retail electricity cost of Electricity Corporation i in the year}) must be paid quarterly, calculated according to the following formula:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._{is the total distribution-retail electricity cost of Electricity Corporation i in the year} P,i_{+ TC} A,i_{+ DC} i,N-1_{: Component of transmission costs based on capacity (VND);}

Where:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._{+ TC} : Component of transmission costs based on energy (VND);

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._{+ DC} : Total adjustment of transmission costs of the i-th unit required to pay transmission costs for Year (N-1) (VND).”

DC_{: Component of transmission costs based on capacity (VND);} 4. Total adjustment of transmission costs of the i-th unit required to pay transmission costs due to the difference between actual and forecasted transfer volume and maximum transfer capacity in Year N-1 (DC

  : Total transmission revenue in Year (N-1) (VND);_{: Component of transmission costs based on capacity (VND);}) must be paid quarterly, calculated according to the following formula:

Where:

 : Forecasted maximum transfer capacity of the i-th unit required to pay transmission costs at all transfer points from the transmission grid in Year (N-1) (MW);

  : Actual maximum transfer capacity of the i-th unit required to pay transmission costs at all transfer points from the transmission grid in Year (N-1) (MW);

  : Forecasted transfer volume of the i-th unit required to pay transmission costs in Year (N-1) (MWh);

   : Actual transfer volume of the i-th unit required to pay transmission costs in Year (N-1) (MWh);

: Average interest rate of VND time deposit with a term of 12 months payable at maturity for corporate customers on December 31, Year (N-1) of four commercial banks (Vietcombank, VietinBank, BIDV, Agribank) plus 3%.”

I_N-1Amending Article 9 as follows:

7. Amend Article 9 as follows:

"Article 9. Principles for Adjusting Transmission Revenue

1. The National Power Transmission Corporation shall be responsible for establishing and maintaining accounting records to track expense items to determine the amount of cost variance and revenue of year N-1 to adjust into the permitted total transmission revenue for year N.

2. The adjustment of transmission costs and revenue shall only be carried out in the following cases:

a) The actual total revenue of the National Power Transmission Corporation in year N-1 differs from the approved permitted total transmission revenue;

b) There is a reasonable and valid cost variance in year N-1 (based on financial reports) compared to the calculated costs approved in the transmission price plan for year N-1 (including depreciation costs, long-term interest expenses, salary costs, major repair costs, purchased service costs, exchange rate differences realized), except for costs arising under points c and d of this Clause;

c) Costs incurred for mitigating the consequences of natural disasters and handling unforeseen incidents in year N-1;

d) Reasonable investment costs for transmission assets outside the approved transmission grid investment plan for year N-1 by competent state authorities."

8. Amend Article 11 as follows:

"Article 11. Responsibilities for Maintaining and Reporting on Cost and Revenue Variances in Transmission

The National Power Transmission Corporation shall be responsible for maintaining accounting records to track expense items and prepare annual reports (in the application for approval of total transmission revenue) regarding the situation of increases and decreases in the adjusted cost and revenue variances for year N-1, including:

1. Adjustments to costs and revenues due to cost variances or costs incurred in year N-1.

2. The cost and revenue variance of year N-1  adjusted in the total permitted transmission revenue for year N.

3. The balance of cost and revenue variances for transmission up to December 31, year N-1."

9. Amend Article 12 as follows:

"Article 12. Method for Determining Cost and Revenue Variances in Transmission

The cost and revenue variance of the National Power Transmission Corporation in year N-1 adjusted in the total permitted transmission revenue for year N, determined according to the following formula: : Actual total transmission revenue implemented in year N-1 (according to financial reports), determined according to the formula:

Where:

 : Approved total transmission revenue for year N-1;

 : Total reasonable actual cost variance compared to approved costs for year N-1 (as stipulated in point b, Clause 2, Article 9 of Circular No. 14/2010/TT-BCT amended at Clause 7, Article 1 of this Circular);

 : Total costs incurred for mitigating the consequences of natural disasters and handling unforeseen incidents; total depreciation costs, interest expenses, and owner's equity returns of reasonable investments made in year N-1 (as stipulated in point c and point d, Clause 2, Article 9 of Circular No. 14/2010/TT-BCT amended at Clause 7, Article 1 of this Circular);

 : Average interest rate of Vietnamese dong time deposits with a term of 12 months paid at maturity for corporate customers on March 31, year N of four commercial banks (Vietnam Joint Stock Commercial Bank for Foreign Trade, Vietnam Joint Stock Commercial Bank for Industry and Trade, Vietnam Joint Stock Commercial Bank for Investment and Development, Vietnam Joint Stock Commercial Bank for Agriculture and Rural Development) plus 3%."

I_{N |||}"Article 16. Procedures and Formalities for Reviewing and Approving Total Transmission Revenue

10. a) The Electricity Generation Unit and the Electricity Purchaser shall agree and specify in the power purchase and sale contract the ratio of electricity volume settled at the contract price within the framework prescribed in Point b, Clause 1 of this Article or the annual contract volume (or each year within a multi-year cycle);

1. The National Power Transmission Corporation shall be responsible for preparing the review dossier for total transmission revenue for year N, submitting it through the Vietnam Electricity Group. Before May 15 each year (year N), the Vietnam Electricity Group shall submit it to the Electricity Regulatory Authority for review and issue an approval document. In case the dossier does not comply with the provisions of Article 17 of Circular No. 14/2010/TT-BCT (amended at Clauses 11 and 12, Article 1 of this Circular), the Vietnam Electricity Group shall be responsible for completing and supplementing within five (05) days from the date of receiving the request from the Electricity Regulatory Authority.

If necessary, the Electricity Regulatory Authority may use consultants to review the dossier submitted for approval of total transmission revenue of the National Power Transmission Corporation.

2. Before June 10 each year (year N), the Electricity Regulatory Authority shall issue an approval document for the permitted total transmission revenue for year N of the National Power Transmission Corporation as the basis for approving the transmission price."

Amend points a, c, and d of Clause 2, Article 17 as follows:

11. "a) Analyze and evaluate the implementation of electricity delivery volume indicators, transmission loss ratio, line and transformer failure rates at various voltage levels, revenue and costs in year N-1 and up to March 31, year N; analyze and evaluate the implementation of profit, owner's equity, financial indicators such as return on owner's equity, capital structure and debt, self-investment ratio, debt repayment ratio up to December 31, year N-1;

c) Explain and calculate the permitted total operating costs for year N (

) of the National Power Transmission Corporation, including:- Total material costs for year N: explanation and calculation of actual material costs implemented in year N-1 and up to March 31, year N, and forecast for year N based on the total length of power lines of various types, total transformer capacity, number of transformer feeder sections according to voltage levels and terrain conditions;

- Total salary costs for year N: explanation and calculation of salary costs;

- Total major repair costs for year N: explanation and calculation of major repair costs in year N as stipulated in Clause 4, Article 6 of Circular No. 14/2010/TT-BCT;

- Total external service costs for year N: explanation and calculation of external service costs based on actual implementation in year N-1 and up to March 31, year N, and forecast for year N;

- Total other cash costs for year N: explanation and calculation of actual other cash costs in year N-1 and up to March 31, year N, and forecast for year N."

- Total other monetary expenses for year N: explanation and calculation table of actual other monetary expenses for year N-1 and up to March 31, year N, and forecast for year N.

d) Explain and calculate the amount of transmission cost and revenue difference for year N-1; report on the increase or decrease in the amount of transmission cost and revenue difference.

12. Amend Points a, b, c, d, and Point e Clause 3 Article 17 as follows:

“a) List of completed investment projects put into operation by March 31, Year N and planned to be implemented until the end of Year N, consistent with the National Power Development Plan and the annual expansion plan of the State Grid Corporation of Vietnam.

b) Statistics on additional and reduced fixed assets of the transmission network up to December 31, Year N-1 and by March 31, Year N, and projected up to the end of Year N, month by month. For assets not yet operational, detailed information on power grid projects and other assets with total value must be provided.

c) Summary table of changes in regular and formal staff in the payroll of the State Grid Corporation and its units in Year N-1 and the plan for Year N.

d) Inventory of spare materials existing and supplemented in Year N-1 and the plan for Year N.

e) Financial statements for Year N-1: balance sheet, income statement, cash flow statement, explanatory notes.”

13. Amend Article 18 as follows:

“Article 18. Procedure for setting transmission prices

1. Before January 5 each year (Year N), the entity responsible for paying transmission costs shall submit the maximum capacity and actual received energy at each delivery point of Year N-1 to the State Grid Corporation of Vietnam for the basis of calculating the adjustment component DC of Year N-1._N-1 of year N-1.

2. Before April 1 each year (Year N), the entity responsible for paying transmission costs shall prepare forecasts of energy delivery and maximum capacity at all delivery points for Year N and submit them to the State Grid Corporation of Vietnam. The State Grid Corporation of Vietnam shall be responsible for compiling and calculating the forecasted energy delivery and maximum capacity of each entity responsible for paying transmission costs, sending the forecast results to the System Operation Center and the National Electricity Market for comments.

In case the entity responsible for paying transmission costs does not submit forecast data, the State Grid Corporation of Vietnam may use the data from Year N-1 to calculate the transmission price for Year N.

3. Before June 1 each year (Year N), the System Operation Center and the National Electricity Market shall provide written comments on the forecasted energy reception and maximum capacity of each entity responsible for paying transmission costs in Year N, and send them to the State Grid Corporation of Vietnam to serve as the basis for determining the transmission price and costs for each entity in Year N.

4. Before June 15 each year (Year N), the State Grid Corporation of Vietnam shall be responsible for determining the transmission price applicable from July 1, Year N to June 30 of the following year for each entity responsible for paying transmission costs (based on approved transmission revenue for Year N and the adjustment component of Year N-1), and submit it to the Vietnam Electricity Group for approval to the Electricity Regulatory Authority for approval. In case the file does not comply with the provisions of Clause 14 Article 1 of this Circular, the State Grid Corporation of Vietnam shall be responsible for completing and supplementing within five (05) days from the date of receipt of the request of the Electricity Regulatory Authority.”) for each unit responsible for paying transmission costs (based on approved transmission revenue for year N and the adjustment component of year N-1), submit to Vietnam Electricity Corporation for review and then submit to the Electricity Regulatory Authority for approval. In case the file does not comply with the provisions of Clause 14, Article 1 of this Circular, the National Power Transmission Corporation shall be responsible for completing and supplementing within five (05) days from the date of receipt of the Electricity Regulatory Authority's request.”

14. Amend Article 19 as follows:

“Article 19. Documents for Approval of Transmission Prices

1. Request for approval of transmission prices.

2. Explanation and calculation table of transmission costs for each entity responsible for paying transmission costs, including:

a) Components of transmission costs based on capacity and energy.

b) Total maximum delivery capacity and forecasted energy delivery of each entity responsible for paying transmission costs at each delivery point in Year N.

c) Total adjustment of transmission costs of entities responsible for paying transmission costs in Year N-1 (detailed calculation table).

3. The accompanying documents include:

a) Forecast of energy reception and maximum capacity in Year N of each entity responsible for paying transmission costs prepared by the System Operation Center and the National Electricity Market.

b) Data on maximum capacity and actual received energy at each delivery point in Year N-1 of each entity responsible for paying transmission costs.”

15. Supplement Point c Clause 3 Article 21 as follows:

“Article 21. Implementation Organization

3. The State Grid Corporation of Vietnam shall be responsible for:

c) Submitting final accounts and independent audit reports before May 1 each year.”

Article 2. Effective Date

1. This Circular takes effect from March 5, 2012, abolishing previous regulations issued by the Ministry of Industry and Trade that conflict with this Circular.

2. The Director of the Electricity Regulatory Authority, the Chairman and General Director of the Vietnam Electricity Group, the General Director of the State Grid Corporation of Vietnam, the Director of the National System Control Center, the Director of the Electricity Purchasing Company, the General Directors of the Electricity Corporations, entities responsible for paying transmission costs, and related organizations and individuals are responsible for implementing this Circular./.