Joint Circular No. 09/2001/TTLT/BCN-BVGCP guiding the purchase and sale of reactive power capacity

JOINT CIRCULAR

Guidelines for Purchasing and Selling Reactive Power Capacity

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Pursuant to Article 32 of Decree No. 45/2001/NĐ-CP dated August 2, 2001, issued by the Government on electricity activities and electricity usage;

To ensure reliable, safe, and efficient electricity supply and consumption, the Ministry of Industry - State Management Board of Prices guides the purchasing and selling of reactive power capacity 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. The electricity consumer must purchase reactive power capacity when using electricity for production, business, or service purposes with a consumption capacity of 80 kW or transformer capacity of 100 kVA or more and a power factor (cosj) less than 0.85.

The electricity supplier is responsible for ensuring the quality of electricity in accordance with Decree No. 45/2001/NĐ-CP. The electricity consumer is responsible for maintaining a power factor (cosj) of at least 0.85. In cases where the electricity supplier fails to ensure the quality of electricity as stipulated in Decree No. 45/2001/NĐ-CP and the agreement in the contract, the electricity consumer does not have to purchase reactive power capacity if the power factor (cosj) is less than 0.85.

2. In this Circular, the following concepts are understood as follows:

- Reactive Power Capacity is a component participating in the magnetic processes of electrical equipment and directly affecting the quality of electric energy. The electricity supplier is responsible for creating optimal operation methods, balancing reactive power capacity across the entire power system to ensure the quality of electric energy according to regulations, while the electricity consumer also has the responsibility to maintain a power factor (cosj) of at least 0.85.

- Purchase Price of Reactive Power Capacity is the amount of money that the electricity consumer must pay to the electricity supplier to compensate for the costs incurred by the electricity supplier due to investment in reactive power capacity sources or changes in grid operation methods caused by the electricity consumer's excessive use of reactive power capacity.

- Sale Price of Reactive Power Capacity from the Electricity Consumer to the Electricity Supplier is the amount of money that the electricity supplier must pay to the electricity consumer when there is a need to supplement the lost reactive power capacity on the grid, provided that the electricity consumer has the ability to inject reactive power capacity into the grid.

3. The purchase of reactive power capacity by the electricity consumer is determined through the average power factor. The average power factor is calculated based on the recorded active and reactive energy quantities at the meter during a billing period.

4. The electricity consumer must settle the purchase price of reactive power capacity concurrently with the purchase price of active energy. The invoice for the purchase of reactive power capacity shall be implemented according to a model registered with the Ministry of Finance. The handling of overdue payments for the purchase of reactive power capacity shall be carried out similarly to the handling of overdue payments for active energy.

II. METHODS FOR CALCULATING THE PURCHASE PRICE OF REACTIVE POWER CAPACITY BY THE ELECTRICITY CONSUMER

1. Method for Determining the Average Power Factor

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

Where:

A_p: Active energy in a meter reading cycle (kWh)

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

b/ In cases where the electricity consumer signs an economic contract for multiple meters at a single location supplied by the same medium or high voltage line, the average power factor is determined by summing the active and reactive energy quantities of all meters to calculate the average cosj.

c/ In cases where the electricity consumer uses electricity for purposes other than production, business, or services, the determination of the power factor is as follows:

- When there is a meter measuring the portion of energy used for production, business, or services, the purchase of reactive power capacity applies only to this portion.

- When it is not possible to separate the portion of energy used for production, business, or services and only a common meter is available, if the power factor cosj is less than 0.85, the electricity consumer still has to purchase reactive power capacity for the entire common energy portion.

2. Method for Determining the Purchase Price of Reactive Power Capacity

The purchase price of reactive power capacity (excluding VAT) is calculated using the formula:

d.1. Amount of taxable income in Vietnam:_q = T_a x k %

Where:

d.1. Amount of taxable income in Vietnam:_q: Purchase price of reactive power capacity (excluding VAT)

d.1. Amount of taxable income in Vietnam:_a: Purchase price of active energy (excluding VAT)

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

The k coefficient is calculated according to the table below:

III. SELLING REACTIVE POWER CAPACITY FROM THE ELECTRICITY CONSUMER TO THE ELECTRICITY SUPPLIER

The electricity consumer sells reactive power capacity when the consumer's compensation equipment can inject reactive power capacity into the grid and the electricity supplier has a demand to purchase it. The sale price of reactive power capacity is agreed upon in the contract between the buyer and seller of electricity. In cases where both parties cannot reach an agreement, they should refer the matter to the Ministry of Industry, State Management Board of Prices for decision.

IV. IMPLEMENTATION

This Circular takes effect 15 days after its issuance and is uniformly applied throughout the country. All previous regulations contrary to this Circular are abolished.

During implementation, if any difficulties arise, organizations and individuals involved in electricity buying and selling are requested to promptly report them to the Ministry of Industry, State Management Board of Prices for appropriate amendments and supplements./.