Circular No. 05/2011/TT-BCT on electricity sale prices for the year 2011 and guidance on implementation

CIRCULAR

Regulations on electricity sales prices for 2011 and guidance on implementation

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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 the Electricity Law dated December 3, 2004; Government Decree No. 105/2005/NĐ-CP dated August 17, 2005 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 on electricity sale prices for the year 2009 and the years 2010-2012 under the market mechanism;

Pursuant to Decision No. 268/QĐ-TTg dated February 23, 2011 of the Prime Minister regarding the Retail Electricity Tariff Schedule;

Pursuant to Decision No. 269/QĐ-TTg dated February 23, 2011 of the Prime Minister regarding electricity sales prices for 2011,

The Minister of Industry and Trade hereby stipulates the electricity sales prices for 2011 and provides guidance on their implementation as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of regulation and applicable subjects

Article 1. This Circular specifies retail electricity prices in detail for various customer groups based on the average electricity sales price for 2011, the tariff structure for retail electricity applicable from 2011 approved by the Prime Minister, and the wholesale electricity prices for retail units purchasing electricity directly from State-owned Power Corporations or provincial Power Companies.

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

Article 3. Electricity prices in areas not connected to the national power grid shall be approved by the People's Committee of the province after receiving a written review opinion from the Electricity Regulatory Authority.

Article 2. Average electricity price

The average electricity price for 2011 is 1,242 VND/kWh (excluding VAT), corresponding to detailed calculation parameters set out in Part A of the Appendix to this Circular.

Article 3. Electricity prices by voltage level

1. Electricity prices by voltage level apply to customers using electricity for production, business services, irrigation pumping, administrative and public services, and industrial zones, as well as other purposes in high-rise residential buildings in cities and new urban areas.

2. The electricity metering system installed at which voltage level determines the electricity selling price according to the price prescribed at that voltage level.

Article 4. Electricity prices according to time-of-use within the day

Electricity sale prices are defined based on time of day usage (hereinafter referred to as three-tier pricing) as follows:

1. Normal Hours

a) From Monday to Saturday

- From 04:00 to 09:30 (5 hours and 30 minutes);

- From 11:30 to 17:00 (5 hours and 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 the following morning (6 hours).

Article 5. Conditions for applying wholesale electricity prices

1. The wholesale electricity prices specified in Articles 15, 16, and 17 of this Circular shall apply to retail electricity businesses meeting the following conditions:

a) Possessing an Electricity Business License in the distribution and retail sectors issued by the competent authority, except in cases where exemption from the Electricity Business License is provided for in point c, Clause 1, Article 34 of the Electricity Law;

b) Maintaining accounting books in accordance with regulations, with the retail electricity business portion being separately accounted for from other business activities;

c) Having a purchase and sale contract for electricity and metering devices installed for each household user as stipulated in Article 24 of the Electricity Law; issuing Value Added Tax invoices for electricity charges to each customer according to the payment periods specified in the electricity purchase and sale contract as prescribed by the Ministry of Finance.

2. For retail electricity businesses that do not meet the conditions stipulated in Clause 1 of this Article, the Wholesale Electricity Supplier shall report to the Department of Industry and Trade for submission to the People's Committee of the province to decide on revoking the Electricity Business License and transferring the power grid under their management to Power Companies to sell electricity directly to end-users. During the waiting period for the completion of the transfer procedures, the Wholesale Electricity Supplier may apply the tiered residential electricity tariff to the total measured electricity consumption at the master meter based on the household usage quota indicated in the latest electricity bill.

Article 6. Guidelines for Implementing Electricity Sales Prices for Domestic Consumption

The electricity prices stipulated in this Circular do not include VAT.

Detailed guidance on implementing the tariff schedule is provided in Part B of the Appendix to this Circular.

Effective date of the tariff schedule: March 1, 2011.

Chapter II

ELECTRICITY SALES PRICE LIST

Article 7. Retail electricity prices for production industries

Retail electricity prices for production sectors are as follows:

Customers purchasing electricity at 20kV voltage level shall be charged according to the price at the voltage level from 22kV to below 110kV.

Article 8. Retail Electricity Prices for Irrigation Pumps

Retail electricity prices for irrigation pumps are as follows:

Article 9. Retail electricity prices for administrative and public service entities

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

Article 10. Retail Electricity Prices for Business Purposes

Retail electricity prices for business purposes are as follows:

            Article 11. Retail Electricity Prices for Residential Purposes

1. Tiered retail electricity prices for residential purposes are as follows:

2. Electricity price for the first tier (0 - 50 kWh) shall only apply to poor households and low-income households that consistently have electricity usage not exceeding 50 kWh/month and have registered with the electricity supplier. Poor households and low-income households to be eligible to purchase electricity at the first-tier price must register according to the guidance provided by the electricity supplier.

3. The pricing schedule from the second tier onwards shall apply to other households using electricity for daily living purposes and to poor households and low-income households that have registered with the electricity supplier for electricity consumption from the 51st kWh onward.

Article 12. Retail electricity prices in areas without national power grid

1. The retail electricity price for residential use in rural, mountainous, and island areas that are not connected to the national power grid shall be approved by the provincial People's Committee but shall not exceed the ceiling and floor prices as follows:

a) Floor price: 1,863 VND/kWh

b) Ceiling price: 3,105 VND/kWh

2. Retail electricity suppliers in rural, mountainous, and island areas that are not connected to the national power grid shall be responsible for developing a pricing plan for electricity customers in these areas on the principle of ensuring business viability and reasonable profit, and clearly identifying the subsidy amount due to selling electricity for residential use at the ceiling price but below the approved business viability price. They shall submit this plan for review by the Department of Industry and Trade and report it to the Electricity Regulatory Authority for written comments before April 1 each year, and the provincial People's Committee shall approve it before July 1 each year.

Retail electricity suppliers in areas connected to the national power grid with local power generation facilities that combine self-generation with purchasing electricity from the national power system to sell to electricity users shall be responsible for developing a pricing plan for electricity customers in these areas to be reviewed by the Electricity Regulatory Authority and submitted to the Ministry of Industry and Trade for approval. These suppliers shall obtain formal written opinions from the provincial People's Committee on the pricing plan before submitting it for review.

Article 13. Retail electricity prices in areas connected to the national power grid that simultaneously have local power generation sources

Article 14. Input electricity purchase price for Power Corporations

Chapter III

RETAIL ELECTRICITY PRICES

1. The average wholesale electricity price that Power Corporations purchase from Vietnam Electricity Corporation (Electricity Trading Company) at delivery points is 891.4 VND/kWh (based on delivered electricity volume), including:

a) Average electricity production cost at the delivery point (including generation cost, imported electricity cost, and transmission loss): 884.2 VND/kWh (based on delivered electricity volume);

b) Average cost for system dispatching, market operation, ancillary services, and industry management: 7.15 VND/kWh (based on delivered electricity volume).

2. The average transmission cost at the delivery point corresponding to the transmission volume at the delivery point to the distribution network is 77.51 VND/kWh.

3. Before March 31, 2011, Vietnam Electricity Corporation shall base on the price specified in Clause 1 of this Article and the input parameters for calculating the electricity sale price in 2011 as stipulated in Part A of the Appendix to determine the adjusted input electricity purchase price for Power Corporations according to the formula specified in Point b, Clause 3 of this Article to serve as the basis for calculation and adjustment of prices during the year, and report to the Electricity Regulatory Authority for supervision according to the following principles:

a) Separating costs of the generation stage, transmission stage, industry management and technical auxiliary services, and distribution-retail stages as stipulated in Part A of the Appendix to this Circular;

b) The formula for calculating the adjusted input electricity purchase price for each Power Corporation is as follows:

DTi :

Where:

For kWh from 0 to 100 (for households with other average income)

Article 15. Wholesale electricity prices for rural areas

1. Determination of the volume of wholesale electricity for rural areas

The wholesale electricity price for rural areas applies to electricity retail units for the volume of wholesale electricity purchased measured at the total meter installed at the transformer station.

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

The principle for determining the quota of electricity usage for households using electricity after the master meter is stipulated in Point b, Clause 1, Section IV, Part B of the Appendix to this Circular.

3. Wholesale electricity price for purposes other than residential use at the master meter for rural electricity purchases is 1,012 VND/kWh.

Wholesale electricity price for collective housing and community residential areas applies to retailers selling electricity measured at the total meter installed at the transformer station or at the branch point of the low-voltage line.

Article 16. Wholesale electricity prices for collective housing areas and residential clusters

1. Determination of the volume of wholesale electricity for collective housing areas and residential clusters

Wholesale electricity price for residential use in collective housing and community residential areas is the price sold at the master meter by Power Corporations, Power Companies, or authorized units to retailers in collective housing and community residential areas.

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

For kWh from 0 to 100

The wholesale electricity price for high-rise apartment buildings in cities and new urban areas is as follows:

The principle for determining the quota of electricity usage for households using electricity for residential purposes after the main meter is stipulated in point b, Clause 1, Section V, Part B of the Appendix of this Circular.

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

Article 17. Wholesale electricity prices for industrial zones

1. The wholesale price of electricity at the 110kV busbar of the 110kV substation in industrial zones applies to cases where retail electricity units purchase wholesale electricity at the 110kV busbar of the industrial zone (the 110kV station invested by the buyer) to sell to electricity consumers within the industrial zone and is defined as follows:

2. The wholesale price of electricity sold by the Electricity Company to retail electricity units 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 shall be the retail price of electricity for production sectors at the corresponding medium voltage level as prescribed in Article 7 of this Circular, reduced by 2%.

3. The wholesale price of electricity sold by the Electricity Company to retail electricity units at the medium voltage side of low voltage substations shall be the retail price of electricity applicable to production sectors at the corresponding medium voltage level as prescribed in Article 7 of this Circular.

Chapter IV

IMPLEMENTATION

Article 18. Inspection Responsibilities

1. The Department of Industry and Trade is responsible for inspecting and supervising retail electricity units under its jurisdiction in implementing the electricity selling prices as prescribed in this Circular. In case of discovering that units do not meet the conditions stipulated in Article 5 of this Circular, the Department of Industry and Trade shall take responsibility for suspending the operations of violating organizations, reporting to the People's Committee of the province to revoke the power business operation license issued by the provincial People's Committee or reporting to the Electricity Regulatory Authority to revoke the power business operation license issued by the Electricity Regulatory Authority for transfer to Electricity Companies to directly sell electricity to end-users.

2. The Department of Industry and Trade is responsible for coordinating with Electricity Companies to inspect and supervise the implementation of household quota calculation and retail electricity pricing at rental housing locations to ensure that tenants are correctly applying the residential electricity retail pricing regulations as prescribed in this Circular.

Article 19. Effective Date

This Circular takes effect from March 1, 2011, according to Decision No. 269/QD-TTg dated February 23, 2011 of the Prime Minister on the electricity selling price for 2011; replacing Circular No. 08/2010/TT-BCT dated February 24, 2010 of the Ministry of Industry and Trade on the electricity selling price for 2010 and guidance on implementation.

During the implementation process, if there are any difficulties, relevant units are requested to report directly to the Electricity Regulatory Authority for examination and resolution within their authority or report to the Ministry of Industry and Trade for resolution./.