Circular No. 07/2006/TT-BCN on guiding the purchase and sale of reactive power capacity

CIRCULAR

Guidelines for purchasing and selling reactive power capacity

____________________

Pursuant to the Electricity Law dated December 3, 2004;

Pursuant to Decree No. 55/2003/NĐ-CP dated May 28, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Industry;

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;

After coordinating with the Ministry of Finance, the Ministry of Industry guides the implementation of purchasing and selling reactive power capacity as prescribed in Article 9 of Decree No. 105/2005/NĐ-CP as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. An electricity purchaser for production, business, and service purposes with a maximum usage capacity of 80 kW or a transformer capacity of 100 kVA or more and a power factor cosj < 0.85 must purchase reactive power capacity.

In cases where the electricity seller fails to ensure the quality of electricity as prescribed in Decree No. 105/2005/NĐ-CP dated August 17, 2005 of the Government, the electricity purchaser does not have to purchase reactive power capacity when the power factor cosj < 0.85.

2. The cost of purchasing reactive power capacity is the amount that the electricity purchaser must pay to the electricity seller to compensate for additional investment costs for reactive power capacity sources or changes in grid operation methods due to the purchaser's excessive use of reactive power capacity.

3. In this Circular, the following terms are understood as follows:

a) The buyer of electricity Electricity purchaser: An organization or individual who has signed an electricity purchase contract with the electricity seller for direct use or resale to other organizations or individuals.

b) The seller of electricity Electricity seller: Wholesale and retail electricity units licensed to operate in the wholesale and retail electricity sectors.

II. PURCHASING AND SELLING REACTIVE POWER CAPACITY

1. The purchase of reactive power capacity by the electricity purchaser is determined at the location of the electrical metering equipment through the average power factor.

The average power factor is calculated based on the active energy recorded at the active energy meter and the reactive energy meter within one meter reading cycle.

The average power factor (cosj) is determined as follows:

Where:

A_{session number}: Active energy in one meter reading cycle (kWh);

A_q: Reactive energy in the corresponding one meter reading cycle (kVArh).

2. In cases where the electricity purchaser signs a contract for multiple meters at one location supplied by the same medium or high voltage line, the active energy is the total active energy from all meters and the reactive energy is the total reactive energy from all meters.

3. In cases where the electricity purchaser uses electricity for purposes other than production, business, and services, the determination of the power factor is as follows:

a. When there is a separate meter for the portion of electricity used for production, business, and services, the purchase of reactive power capacity only applies to this portion.

b. When there is no separate meter for the portion of electricity used for production, business, and services but only a common meter, if the power factor cosj < 0.85, the electricity purchaser still has to purchase reactive power capacity for the entire common portion.

4. The cost of purchasing reactive power capacity is calculated according to the formula:

Where:

T_q: Cost of purchasing reactive power capacity (excluding VAT);

T_a: Cost of purchasing active energy (excluding VAT);

k : Compensation rate for exceeding the specified reactive power capacity (%).

Coefficient k is calculated according to the table below:

5. The electricity purchaser must settle the cost of purchasing reactive power capacity concurrently with the cost of purchasing active energy. The invoice for purchasing reactive power capacity shall be issued according to the model registered with the Ministry of Finance. The handling of overdue payments for purchasing reactive power capacity shall be processed similarly to the handling of overdue payments for purchasing active energy.

6. In cases where the electricity purchaser has the ability to supply reactive power capacity to the power system and the electricity seller has a need to purchase reactive power capacity, both parties may agree on the purchase and sale of reactive power capacity through a contract. If the two parties cannot reach an agreement, they should refer the matter to the Ministry of Industry for consideration and decision.

III. EFFECTIVE DATE OF IMPLEMENTATION

1. This Circular takes effect 15 days after its publication in the Official Gazette and replaces Circular Joint Circular No. 09/2001/TTLB-BCN-BVGCP dated October 31, 2001 of the Ministry of Industry and the State Price Council regarding guidelines for purchasing and selling reactive power capacity.

2. All electricity units, electricity purchasers, and electricity sellers related to this Circular are responsible for its implementation.

3. During the implementation process, any difficulties should be reported to the Ministry of Industry for timely review and resolution./.