Circular No. 05/2009/TT-BCT on electricity sale prices for 2009 and guidance on implementation

CIRCULAR

Regulations on electricity sales prices for the year 2009 and guidance on implementation

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THE MINISTER OF INDUSTRY AND TRADE

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

Pursuant to the Electricity Law dated December 3, 2004; 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 Decision No. 21/2009/QĐ-TTg dated February 12, 2009 of the Prime Minister approving electricity sales prices for the year 2009 and the years 2010-2012 under the market mechanism;

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

c) Enterprises may be granted permission for no more than one block out of the total three dual-frequency blocks (FDD) B

PART I

GENERAL PROVISIONS

Article 1. Scope and Applicability

1. This Circular stipulates electricity wholesale prices, retail prices, and provides guidance on implementing electricity prices.

2. This Circular applies to organizations and individuals purchasing and selling electricity from the national power grid.

3. Electricity sales prices at areas not covered by the national power grid shall be decided by the People's Committee of the province after obtaining written comments from the Electricity Regulatory Authority.

Article 2. Electricity sales prices according to voltage levels

1. Electricity sales prices according to voltage levels prescribed in this Circular apply to all electricity customers except those purchasing electricity at residential retail rates, rural wholesale rates, collective housing areas, and community clusters.

2. The electricity metering system installed at which voltage level shall be charged according to the price specified at that voltage level.

Article 3. Electricity sales prices according to time-of-use within the day

Electricity sales prices are defined according to the time of electricity usage within the day (hereinafter referred to as the three-tier pricing system).

1. Normal hours:

a) From Monday to Saturday:

- From 04:00 to 09:30 (05 hours 30 minutes);

- From 11:30 to 17:00 (05 hours 30 minutes);

- From 20:00 to 22:00 (2 hours).

b) Sunday:

From 04:00 to 22:00 (18 hours).

2. Peak hours:

a) From Monday to Saturday:

- From 09:30 to 11:30 (2 hours);

- From 17:00 to 20:00 (3 hours).

b) Sunday: no peak hours.

3. Off-peak hours:

All days of the week: from 22:00 to 04:00 (06 hours) the following morning.

Article 4. Conditions for applying wholesale electricity prices

Wholesale electricity prices stipulated in Articles 8, 9, and 10 of this Circular shall be applied to power units meeting the following conditions:

a) Possessing a Power Business License issued by the competent authority in the distribution and retail sectors.

b) Maintaining accounting records as required, clearly distinguishing the accounting entries for electricity sales operations.

c) Having a power purchase and sale contract, individual electricity meters for each household, and issuing electricity bills to each customer according to the payment periods specified in the power purchase and sale contract.

Article 5. Guidance on implementing electricity sales prices

1. The electricity sales prices prescribed in this Circular do not include value-added tax.

2. Detailed guidance on implementing the tariff schedule set forth in the Appendix attached to this Circular.

Chapter II

RETAIL ELECTRICITY PRICES

Article 6. Parameters for calculating electricity prices in 2009

The parameters used for calculating electricity prices in 2009 (average retail electricity price is 948.5 VND/kWh, excluding VAT) include:

1. Anticipated total commercial electricity output in 2009: 74.701 billion kWh.

2. Anticipated total electricity production and imports in 2009: 85.046 billion kWh.

3. Water inflow frequency to hydropower reservoirs: 50%.

4. Coal price for electricity: coal type 5 at 405,500 VND/ton and coal type 4b at 442,000 VND/ton (increased by 27% compared to the coal price for electricity in 2008).

5. West South gas price for electricity calculated based on the average crude oil price in 2009: 60 USD/barrel equivalent to the Singapore MFO market price: 47.4 USD/barrel.

6. Average diesel fuel (DO) price for power generation in 2009: 11,000 VND/liter.

7. Average fuel oil (FO) price for power generation in 2009: 8,500 VND/kg.

8. Exchange rate between the Vietnamese Dong and the US Dollar: 17,000 VND/USD.

Article 7. Wholesale electricity selling price for Electricity Companies

1. Average wholesale electricity selling price for Electricity Companies

The average wholesale electricity selling price by Electricity Trading and Supply Company (EPTC) sold to Electricity Companies at delivery points is: 706.96 VND/kWh, including:

a) Average electricity production price up to the delivery point (including generation price, imported electricity purchase price, and transmission loss): 629.05 VND/kWh.

b) Average cost for system dispatching, market operation and trading, ancillary services, and industry management: 9.25 VND/kWh.

c) Average transmission price up to the delivery point: 68.66 VND/kWh (for both domestically produced and imported electricity transmitted through the grid).

2. Prior to March 31, 2009, Vietnam Electricity Corporation (EVN hereinafter referred to as EVN) shall base on the prices stipulated in Clause 1 of this Article to establish adjusted wholesale prices for each Electricity Company and cross-subsidy amounts among Electricity Companies on the principle of ensuring the return on equity of each Electricity Company at the level approved in the 2009 electricity pricing plan, and report to the Electricity Regulatory Authority.

In case the determination of the adjusted wholesale prices for each Electricity Company and cross-subsidy amounts does not comply with the principles and calculation parameters, within 15 days from receiving the official document from EVN, the Electricity Regulatory Authority shall issue a document requesting EVN to provide explanations and recalculate.

Article 8. Wholesale Electricity Price for Rural Areas

1. Conditions for Application

The rural wholesale electricity selling price applies to retail electricity business units in rural areas that meet all conditions specified in Article 4 of this Circular and must have a total meter installed at the transformer station.

After August 31, 2009, if rural electricity business units fail to meet the above conditions, the Department of Industry and Trade shall report to the People's Committee of the province to revoke their electricity operation licenses, unify plans to suspend operations of violating units to hand over to Electricity Companies to directly supply electricity to rural end-users.

2. Wholesale electricity prices for rural residential use are as follows:

Rural residential wholesale electricity price is the price sold at the total meter by Electricity Companies or units authorized by EVN to sell to rural electricity retail organizations. The principle for determining the number of households using electricity after each total meter is detailed in Point b, Clause 1, Section IV of the Appendix attached to this Circular.

3. Wholesale electricity price for other purposes is 865 VND/kWh.

Article 9. Wholesale Electricity Price for Collective Housing Areas and Residential Clusters

1. Conditions for application:

The wholesale electricity price for collective housing and community residential areas applies to retail electricity organizations that meet all conditions stipulated in Article 4 of this Circular and must have a total meter installed at the transformer station or at the branch line of the low-voltage distribution line.

After August 31, 2009, if retail electricity organizations fail to meet these conditions, the Department of Industry and Trade shall submit a plan to suspend operations of violating units to the provincial People's Committee for approval, report to the Electricity Regulatory Authority to revoke the electricity operation licenses of these organizations.

2. Wholesale electricity prices for residential use in collective housing areas and residential clusters are as follows:

Residential wholesale electricity price for collective housing and community residential areas is the price sold at the total meter by Electricity Companies or authorized units to sell to retail electricity organizations in collective housing and community residential areas. The principle for determining the number of households using electricity after each total meter is detailed in Point b, Clause 1, Section V of the Appendix attached to this Circular.

Residential wholesale electricity price for new urban area high-rise buildings is the stepped residential retail electricity price prescribed in Article 15 of this Circular reduced by 3% according to corresponding stepped levels.

3. The wholesale electricity selling price for purposes other than residential use in collective housing areas and community clusters is stipulated as follows:

Article 10. Wholesale Electricity Price for Industrial Zones

1. The wholesale electricity price at the 110kV busbar of the 110kV substation in industrial zones applies to cases where the electricity buyer purchases electricity at the 110kV busbar of the industrial zone (the 110kV substation invested by the buyer) to resell to end-users in the industrial zone at medium voltage of consumer substations in the industrial zone, as follows:

2. The wholesale electricity price by Electricity Companies sold to the electricity buyer at the medium voltage busbar of the 110/35-22-10-6 kV substation or at the branch point of the medium voltage line entering the industrial zone is the retail electricity price for production industries at the corresponding medium voltage level prescribed in Article 11 of this Circular reduced by 2%.

3. The wholesale electricity price by Electricity Companies sold to the electricity buyer at the medium voltage side of the low-voltage substation is the retail electricity price applied to production industries at the corresponding medium voltage level prescribed in Article 11 of this Circular.

Chapter III

ELECTRICITY SALES PRICE LIST

Article 11. Retail electricity prices for production industries

Retail electricity prices for production sectors are as follows:

Article 12. Retail electricity price for irrigation water pumping

Retail electricity prices for irrigation pumps are as follows:

Article 13. Retail electricity price for administrative and public service entities

Retail electricity prices for administrative and public service entities are as follows:

Article 14Retail electricity price for commercial activities

Retail electricity prices for business purposes are as follows:

Article 15. Stepped retail electricity price for residential use

Retail electricity prices for residential purposes are as follows:

Article 16. Retail electricity price in places without national power grid

Retail electricity business units shall develop investment development plans for power grids and pricing schemes to be reviewed by the Department of Industry and Trade and submitted to the Provincial People's Committee for approval. Before issuing the approval decision, the Provincial People's Committee shall send the detailed proposal to the Electricity Regulatory Authority for review and comments in writing.

Chapter IV

IMPLEMENTATION

Article 17. Supervision responsibility

1. The Department of Industry and Trade shall supervise the implementation of retail electricity pricing mechanisms by retail electricity business units serving rural households, households in collective housing and community residential areas within its jurisdiction as stipulated in this Circular. If violations are found, the Department of Industry and Trade shall report to the Provincial People's Committee to revoke the electricity operation licenses issued by the provincial People's Committee or report to the Ministry of Industry and Trade to revoke the licenses issued by the Ministry to suspend operations of violating organizations and transfer them to Electricity Companies to directly supply electricity to end-users.

2. The Department of Industry and Trade shall be responsible for reporting to the People's Committee of the province, coordinating with power companies to unify the plan and method of transferring the power grid of rural retail electricity business units, residential complexes, and community clusters that do not meet the required conditions for power companies.

Article 18. Effectiveness

1. This Circular takes effect from March 1, 2009, replacing Circular No. 11/2006/TT-BCN dated December 20, 2006, issued by the Ministry of Industry on guiding the implementation of electricity selling prices; Decision No. 45/2006/QD-BCN dated December 14, 2006, issued by the Ministry of Industry on wholesale electricity prices for rural areas and wholesale electricity prices for residential complexes and community clusters; and Decision No. 15/2007/QD-BCT dated December 31, 2008, issued by the Ministry of Industry promulgating the framework for wholesale electricity prices for industrial zones.

Repeal Document No. 3623/BCT-ĐTĐL dated March 5, 2008, of the Ministry of Industry and Trade on wholesale electricity prices for the Nhơn Trạch Industrial Zone.

2. The Director of the Electricity Regulatory Authority, the Head of the Ministry’s Office, the Inspector General of the Ministry, the Directors of the Departments of Industry and Trade, the General Directors of the Vietnam Electricity Corporation, the Directors of power companies, relevant power units, and related organizations and individuals are responsible for implementing this Circular./.