Circular No. 08/2025/TT-BCT stipulates the method for determining power generation costs of power plants during the phase before participating in competitive electricity markets for certain types of power plants.

CIRCULAR

Regulations on the method for determining power generation costs of power plants

; during the period before participating in competitive electricity markets for certain types of power plants

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On the basis of Electricity Law November 30, 2024;

Decree No. 96/2022/NĐ-CP dated November 29, 2022, of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade; Decree No. 105/2024/NĐ-CP dated August 1, 2024, of the Government amending and supplementing some articles of Decree No. 96/2022/NĐ-CP and Decree No. 26/2018/NĐ-CP dated February 28, 2018, of the Government on the Charter of Operation and Activities of Vietnam Electricity Corporation;

Pursuant to the proposal of the Director of the Electricity Regulatory Authority;

The Minister of Industry and Trade promulgates this Circular stipulating power generation costs of power plants during the period before participating in competitive electricity markets for certain types of power plants.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Circular provides detailed regulations on Clause 4, Article 51 of the Electricity Law No. 61/2024/QH15 regarding the method for determining power generation costs of power plants during the period before participating in competitive electricity markets. 2. This Circular applies to Vietnam Electricity Corporation, power plants under Vietnam Electricity Corporation during the period before participating in competitive electricity markets including:

a) Strategic multi-purpose hydropower plants;

b) Power plants operating in conjunction with strategic multi-purpose hydropower plants to support system regulation according to the list prescribed by the Ministry of Industry and Trade;

c) Other power plants that cannot determine the price of power generation services.

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

Article 2. Interpretation of Terms

Strategic multi-purpose hydropower plant

1.is a hydropower plant included in the list of large power plants with special significance for the economy, society, national defense, and security approved by the Prime Minister at Decision No. 2012/QĐ-TTg dated October 24, 2016 or subsequent decisions.Year N

2.is the calendar year from January 1 to December 31 of the same year.Year N-1

3.is the calendar year immediately preceding Year N.Year N-2

4.is the calendar year immediately preceding Year N-1.METHOD FOR DETERMINING ANNUAL POWER GENERATION COSTS

Chapter II

Article 3. Principles for Determining Annual Power Generation Costs

The annual power generation costs of power plants specified in Clause 2, Article 1 of this Circular shall be established based on the principle of ensuring sufficient compensation for actual reasonable and legitimate costs necessary for electricity production and business operations consistent with the types of technology of the plants, excluding the predetermined profit rate determined in accordance with the Government's Decree stipulating the mechanism and time for adjusting the average retail electricity price.

Article 4. Method for Determining Annual Power Generation Costs

1. The total annual power generation cost (C

) of the plant is determined according to the following formula:_{N |||}= C

C_{N |||}VL_DVMNĐMT_TL(VND) from direct and indirect power plants participating in the electricity market;_SCL(VND) from direct and indirect power plants participating in the electricity market;_NL(VND) from direct and indirect power plants participating in the electricity market;_MN(VND) from direct and indirect power plants participating in the electricity market;_{Economic life of the power plant as specified in the Appendix attached to this Circular (years).}(VND) from direct and indirect power plants participating in the electricity market;_KĐMT_GTĐMT_{Material costs in Year N (VND);}

Where:

: Total cost of electricity purchase for the year (VND) from direct and indirect power plants participating in the electricity market, as specified in Clause 2 of this Article;_KH: Labor costs in Year N (VND) include total labor costs and other costs with the nature of wages such as safety bonuses, health insurance costs, social insurance costs, unemployment insurance costs, and trade union fees, determined in accordance with relevant laws;

c) C_TL: Depreciation costs of fixed assets in Year N (VND), determined based on the current value of fixed assets and those expected to be put into use in Year N according to the management, use, and depreciation rules for fixed assets issued by the Ministry of Finance or authorized agencies;

(VND) from small renewable energy power plants, as specified in Clause 2 of this Article;_SCL: External service costs in Year N (VND)

(VND) from power plants using renewable and new energy including storage systems, as specified in Clause 2 of this Article;_NLExternal service costs in Year N do not include electricity purchase costs, determined based on data audited independently by an auditing unit for Year N-2, excluding abnormal and unexpected costs of Year N-2 (if any), adjusted annually based on the average CPI of the three most recent years prior to the time of establishing prices published by the central statistical agency, and supplemented with reasonable expected costs for Year N that were not calculated or fully calculated for Year N-2;

: Major repair costs in Year N (VND), determined based on the budget for major repair projects in Year N approved by the competent authority;

(VND) from imported electricity, as specified in Clause 2 of this Article._MN: Financial costs in Year N (VND)

a) Power plant production volume: as stipulated in Article 3 of this Circular;_{Economic life of the power plant as specified in the Appendix attached to this Circular (years).}Financial costs in Year N include total interest expenses, bond expenses, financial lease expenses, and fees for borrowing funds payable in Year N, determined based on contracts and legally binding documents, and projected borrowing costs for production and business activities in Year N; exchange rate differences are determined according to accounting financial regulations (if applicable);

: Other monetary costs in Year N (VND)

(VND), including: total interest costs, bond costs, lease costs, and other fees for borrowing that must be paid in year_KOther monetary costs in Year N include: land rental costs, resource tax, forest environmental service fees, water resource exploitation rights fees, various taxes and fees, meal allowances, and other monetary costs.

Land rental costs, resource tax, forest environmental service fees, water resource exploitation rights fees, various taxes and fees, meal allowances are determined according to current regulations.

Other monetary costs in Year N of the plant are determined based on data audited independently by an auditing unit for Year N-2, excluding abnormal and unexpected costs of Year N-2 (if any), adjusted annually based on the average CPI of the three most recent years prior to the time of establishing power generation costs published by the central statistical agency, and supplemented with reasonable expected costs for Year N that were not calculated or fully calculated for Year N-2;

h) C

h) C_GT||| The fuel cost for year N (in dong) is determined based on the input parameters used in the planning of electricity supply and operation of the national power system for year N and/or fuel purchase and sale contracts;

||| i)_{Material costs in Year N (VND);}||| Reductions from production costs from revenues from the disposal and sale of fixed assets expected in year N (in dong).

||| 2. For costs that are determined based on data audited by an independent auditing entity for year N-2, if there is data audited by an independent auditing entity for year N-1, these costs shall be calculated based on the data audited by an independent auditing entity for year N-1. The Vietnam Electricity Corporation is responsible for establishing the costs for year N for newly operational dependent power plants or those recently transferred.

||| 3. In cases where major repairs of power plants specified in Clause 2 of Article 1 of this Circular are carried out through a single dependent repair entity under the Vietnam Electricity Corporation, the costs of this entity will be determined similarly to other dependent power plants as stipulated in Clause 1 of this Article.

||| Article 5. Documents for Calculating Annual Power Generation Costs

||| 1. Reports on the implementation of economic and technical indicators of power plants specified in Clause 2 of Article 1 of this Circular up to September 30 and estimated completion by December 31 of year N-1, including:

||| a) Report on actual electricity generation and average fuel consumption for year N-1;

||| b) Report on business operations results: costs of power plants specified in Clause 2 of Article 1 of this Circular up to September 30 and estimated completion by December 31 of year N-1.

||| 2. Explanations and calculations of costs for year N of power plants specified in Clause 2 of Article 1 of this Circular include:

||| a) Explanations and tables of material costs, external service costs, and other monetary costs estimated for year N-1 and projected for year N as provided in Points a, d, and g of Clause 1 of Article 4 of this Circular;

||| b) Explanations and tables of labor costs as provided in Point b of Clause 1 of Article 4 of this Circular;

||| c) Explanations and tables of major repair costs for year N as provided in Point d of Clause 1 of Article 4 of this Circular;

||| d) Explanations and detailed tables of depreciation costs and financial costs for year N as provided in Points c and e of Clause 1 of Article 4 of this Circular.

||| 3. Attached documents include:

||| a) Audited financial statements for year N-2 performed by an independent auditing entity: Balance sheet, income statement, cash flow statement, explanatory notes;

||| b) Summary of workforce numbers for year N-1 and plan for year N;

||| c) Report on major repair activities for year N-1 and projections for year N;

||| d) Fuel purchase and sale contracts and related documents.

||| 4. If there is an audited financial report for year N-1, the data for year N-1 specified in Clause 2 of this Article shall be updated according to the audited financial report for year N-1.

Chapter III

IMPLEMENTATION

||| Article 6. Responsibilities of State Management Authorities for Electricity at the Ministry of Industry and Trade

||| 1. Review annual power generation costs of power plants specified in Clause 2 of Article 1 of this Circular in the electricity price plan.

||| 2. Guide and resolve any issues arising during the calculation of annual power generation costs of power plants specified in Clause 2 of Article 1 of this Circular.

Article 7. Responsibilities of Vietnam Electricity Corporation

Vietnam Electricity Corporation shall be responsible for implementing the provisions of this Circular.

Article 8. Effective Date

1. This Circular takes effect from February 1, 2025.

2. The Circular No. 26/2017/TT-BCT dated November 29, 2017 of the Minister of Industry and Trade on the method and procedure for determining annual costs and electricity prices for multi-purpose strategic hydropower plants is hereby repealed.

3. Clause 3 of Article 4 of the Circular No. 09/2024/TT-BCT dated July 30, 2024 of the Minister of Industry and Trade on the calculation of average electricity selling price is hereby repealed.