Circular No. 10/2024/TT-BCT stipulates the method for setting dispatch prices for power system operation and market transaction management.

CIRCULAR

Regulations on the method for setting dispatch prices for power system operation and market transaction management

and managing electricity market transactions

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Pursuant to the Electricity Law dated December 3, 2004; and the Law Amending and Supplementing Certain Provisions of the Electricity Law dated November 20, 2012;

Pursuant to the Law on Prices No. 16/2023/QH15 dated June 19, 2023;

Based on Decree No. 96/2022/NĐ-CP dated November 29, 2022 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

At the proposal of the Director of the Electricity Regulatory Authority under the Ministry of Industry and Trade;

AND Ministry of Science and Technology hereby promulgates the Circular stipulating on the method SOVEREIGN for setting dispatch prices for power system operation and market transaction management.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Circular guides the method for setting dispatch prices for power system operation and market transaction management from when the Power System Operation and Market Entity becomes an independent accounting entity.

2. This Circular applies to:

a) Vietnam Electricity Corporation;

b) The Power System Operation and Market Entity from when it becomes an independent accounting entity;

c) Other organizations and individuals related thereto.

Article 2. Interpretation of Terms

Strategic multi-purpose hydropower plant

1. System Operator and Market Operator is the entity in charge of commanding and controlling the power generation, transmission, and distribution processes within the national power system and managing electricity market transactions.

2. Price dispatch operation of the power system and market transaction management includes dispatch prices for power system operation and transaction management prices as stipulated in Clause 2, Article 31 of the Electricity Law (amended and supplemented according to Clause 8, Article 73 of Law on Prices No. 16/2023/QH15).

3. Year N is the calendar year applying dispatch prices for power system operation and market transaction management calculated from January 1 to December 31 of that year.

4. Year N-1 is the Gregorian calendar year immediately preceding Year N |||.

5. Year N-2 is the Gregorian calendar year immediately preceding Year N-1.

Chapter II

DETERMINATION SETTING

DISPATCH PRICES FOR POWER SYSTEM OPERATION

AND MARKET TRANSACTION MANAGEMENT

Article 3. Method SOVEREIGN for setting dispatch prices for power system operation and market transaction management

1. Dispatch prices for power system operation and market transaction management are determined annually based on reasonable and legitimate costs and allowable profits for the Power System Operation and Market Entity to perform tasks related to dispatching, operating the power system, and managing market transactions in that year.

2. Dispatch prices for power system operation and market transaction management in N ||| ( ) are determined according to the following formula:

In which:             

Article 4. Method for determining total allowable revenue from dispatch operation of the power system and market transaction management annually

Total allowable revenue from dispatch operation of the power system and market transaction management for the year N ||| (including allowable capital cost components , allowable operational and maintenance costs, allowable profit () and revenue adjustment amount for the year N ||| ), determined according to the following formula:

Where:

Article 5. Method for determining profit allowed

Projected allowable profit for the year N ||| () of the System Operation Unit and Electricity Market shall be determined according to the following formula:

Where:

Article 6. Method for determining total capital cost allowed

1. Total allowable capital cost for year N ||| (VL

Where:

2. Estimated total depreciation cost of fixed assets for year N ||| () shall be determined in accordance with the regulations on management, use, and depreciation of fixed assets issued by the Ministry of Finance.

3. Estimated total financial cost for year N |||  including short-term and long-term interest, bond interest, finance lease interest, and other fees payable for borrowing, determined based on credit contracts and finance lease contracts of the System Operation Unit and Electricity Market.

4. Expected foreign exchange rate difference arising from repayment of foreign currency loans for year N |||  shall be determined in accordance with financial accounting regulations.

5. Expected revaluation foreign exchange rate difference for year N |||  shall be determined in accordance with financial accounting regulations.

Article 7. Method for determining total operating and maintenance costs allowed

1. Total allowable operating and maintenance costs for year N ||| (VL

Where:

2. Estimated material cost for year N ||| () shall be determined based on audited data for year , excluding abnormal one-off costs in year, adjusted annually based on the average CPI of the three years immediately preceding the time of building the average retail electricity price and supplemented with reasonable costs expected to occur in year N but not yet included or fully included in year , excluding abnormal one-off costs in year, adjusted annually according to the average industrial production price index of the five years immediately preceding the time of price construction published by the General Statistics Office, and supplemented with reasonable expected costs for year N ||| : Total financial costs in year , excluding abnormal one-off costs in year.

3. Estimated wage cost for year N ||| (VL

Where:

4. Estimated major repair cost for year N ||| () shall be determined based on approved annual major repair project estimates N ||| by the competent authority.

5. Method for determining total cost of purchased services

a) Estimated total cost of purchased services for year N ||| () includes:

- Costs paid to organizations and individuals outside the unit for providing the following services: electricity, water, software, telephone, telecommunications, books; technical document purchase and usage costs; software maintenance costs; audit consulting service costs; security and protection service costs (if applicable); office rental costs; asset insurance costs;

- Costs for other services provided under signed service contracts to support system operation and market management for year N ||| if necessary.

b) Estimated total cost of purchased services for year N ||| () shall be determined based on audited data for year , excluding abnormal one-off costs in year, adjusted annually based on the average CPI of the three years immediately preceding the time of building the average retail electricity price and supplemented with reasonable costs expected to occur in year N but not yet included or fully included in year , excluding abnormal one-off costs in year, adjusted annually according to the average industrial production price index of the five years immediately preceding the time of price construction published by the General Statistics Office, and supplemented with reasonable expected costs for year N ||| : Total financial costs in year , excluding abnormal one-off costs in year.

6. Method for determining total other monetary costs

a) Estimated total other monetary costs for year N ||| () includes: taxes, fees, land rent, meal allowances, and other monetary costs expected for year N |||are determined based on audited financial reports based on the results of inspection or announced production and business costs in year N ||| determined in accordance with current regulations;

b) Estimated other monetary costs for year N ||| includes: travel expenses; conference and reception expenses; training expenses; scientific research, innovation improvement expenses; civil defense, protection expenses, expenses for preventing and mitigating force majeure such as natural disasters, epidemics, strikes, terrorism; fire prevention and extinguishing expenses; labor protection, work attire, occupational safety, industrial hygiene, and environmental expenses; drinking water expenses during working hours, night shift subsidies, hazardous job subsidies; first aid expenses for workplace injuries, common medical expenses, rehabilitation expenses for employees, and recruitment expenses and other expenses as prescribed by law.

Estimated other monetary costs for year N ||| shall be determined based on audited data for year , excluding abnormal one-off costs in year, adjusted annually based on the average CPI of the three years immediately preceding the time of building the average retail electricity price and supplemented with reasonable costs expected to occur in year N but not yet included or fully included in year , excluding abnormal one-off costs in year, adjusted annually according to the average industrial production price index of the five years immediately preceding the time of price construction published by the General Statistics Office, and supplemented with reasonable expected costs for year N ||| : Total financial costs in year , excluding abnormal one-off costs in year.   

7. In cases where there are independent audit data for year N-1, the System Operation Unit and Electricity Market and Vietnam Electricity Corporation shall use the audit data to check material costs, purchased service costs, and other monetary costs for year N-1 to calculate the corresponding cost for the year N |||.

Article 8. Supporting documents for calculation price dispatch operation of the power system and market transaction management

1. Report on the basis for setting the dispatching and operation price of the power system and market management for year N |||.

2. Explanation and pricing tables for the dispatching and operation price of the power system and market management for year a) Report on evaluating the implementation of electricity sales volume indicators, power loss ratio, revenue realization, costs, profit, and owner's equity up to December 31 (or September 30 if December 31 data is not available) of year b) Explanation and calculation of cost components and profit of Electricity Corporation i, including:

a) Report on the assessment of revenue and expenditure implementation, financial indicators such as return on shareholders' equity, equity and debt structure, self-investment ratio, debt repayment ratio for year N-1.

b) Explanation and calculation of allowable profit for year N |||  of the System Operation Unit and Electricity Market, including:

- Expected shareholders' equity for year N |||;

- Expected return on shareholders' equity for year N |||.

c) Explanation and calculation of allowable total capital cost for year N |||  of the System Operation Unit and Electricity Market, including:

- Annual total depreciation cost N |||: Summary table of depreciation of fixed assets for year N |||, detailed calculation table of basic depreciation costs by type of fixed assets in year N ||| (including the depreciation calculation table of assets expected to be put into operation in year).

- Total financial expenses and exchange rate differences for the year N |||: Detailed calculation table of financial costs, detailed interest expenses, and exchange rate differences during the year N ||| according to each credit contract and financial lease contract of the System Operation and Electricity Market Unit.

d) Explanation and calculation of total operating and maintenance costs for the permitted year N ||| , including:

- Total material costs for the year N |||: Explanation and calculation table of expected material costs for year N as stipulated in Clause 2, Article 7 of this Circular;

- Total labor costs for the year N |||: Explanation and calculation table of labor costs as stipulated in Clause 3, Article 7 of this Circular;

- Total major repair costs for the year N |||: Explanation and calculation table of major repair costs during the year N ||| as stipulated in Clause 4, Article 7 of this Circular;

- Total external service costs for the year N: Explanation and calculation table of external service costs according to the planned categories for the year N ||| as stipulated in Clause 5, Article 7 of this Circular;

- Total other monetary costs for the year N |||: Explanation and calculation table of expected other monetary costs for the year N ||| as stipulated in Clause 6, Article 7 of this Circular.

đ) Explanation and calculation of total dispatch operation revenue and market transaction management revenue for the permitted year N |||.

3. The accompanying documents include:

a) List and value of completed investment projects, expected to be put into operation by December 31 of year N-1 and year N ||| (by month).

b) Summary table of workforce for the year N-1 and plan for year N.

c) List of major repair items for fixed assets for the year N-1 and expected for year N |||.

d) Financial statements for the year , excluding abnormal one-off costs in year (and the previous year's financial statements if available), audited by an independent auditing agency. N |||1. In cases where there is a discrepancy between the calculated parameters for the dispatch operation price and market transaction management price with actual data, leading to an estimated change in the dispatch operation price and market transaction management price compared to the approved price, the dispatch operation price and market transaction management price will be adjusted based on the report from the System Operation and Electricity Market Unit.

Article 9. Supporting documents for calculation for setting dispatch prices for power system operation and market transaction management of regulation

2. Documents serving the calculation of the dispatch operation price and market transaction management price adjustment for the year include:

a) Report on the basis for establishing the adjusted dispatch operation price and market transaction management price for the year N ||| b) Explanation and calculation table of the adjusted dispatch operation price and market transaction management price of the System Operation and Electricity Market Unit as stipulated in Articles 3, 4, 5, 6, and 7 of this Circular;

c) Relevant documents and supporting texts. N |||;

Service Contract

for system operation and electricity market

Chapter III

IMPLEMENTING PROVISIONS

Article 101. The service contract for system operation and electricity market is signed between the System Operation and Electricity Market Unit and the Vietnam Electricity Corporation. 2. The Vietnam Electricity Corporation is responsible for paying the system dispatch cost and market transaction management cost according to the signed contract.

Responsibilities of related units

1. The System Operation and Electricity Market Unit is responsible for taking the lead and coordinating with the Vietnam Electricity Corporation to establish and report the dispatch operation price and market transaction management price in accordance with the law.

Article 11. 2. The System Operation and Electricity Market Unit leads and coordinates with the Vietnam Electricity Corporation to determine, record revenue and expenses; issue and use invoices; fulfill tax obligations to the state budget in accordance with corporate accounting laws, tax laws, laws on managing and using state capital invested in production and business at enterprises, and other relevant laws.

3. The Electricity Regulatory Authority is responsible for leading and coordinating with the Planning and Finance Department and the Cadre and Civil Servant Organization Department to review the dispatch operation price and market transaction management price, and submit it to the competent authority for approval.

The Electricity Regulatory Authority implements the approval process for the dispatch operation price and market transaction management price in accordance with the legal normative document on the division of powers by the Government regarding the approval authority for the dispatch operation price and market transaction management price.

When becoming an independent accounting unit, the System Operation and Electricity Market Unit leads and coordinates with the Vietnam Electricity Corporation to develop and report the cost calculation method to determine the dispatch operation price and market transaction management price in accordance with this Circular for the Electricity Regulatory Authority to review in accordance with regulations. During the period when the dispatch operation price and market transaction management price have not been approved, the parties agree on provisional payment terms in the dispatch service contract until the dispatch operation price and market transaction management price for the year is approved. Any difference between provisional payment and payment according to the approved dispatch operation price and market transaction management price for the year will be settled by the parties after the dispatch operation price and market transaction management price for the year is approved.

The Electricity Regulatory Authority shall implement the submission for approval of the dispatch price for system operation and market transaction management in accordance with the provisions of the regulatory legal document on the division of responsibilities by the Government stipulating the authority to approve the dispatch price for system operation and market transaction management.

Article 12. Transitional Provisions

When becoming an independent accounting unit, the System Operation and Electricity Market Unit shall take the lead and coordinate with the Vietnam Electricity Group to develop and report the cost calculation plan to determine the dispatch price for system operation and market transaction management in accordance with this Circular for the Electricity Regulatory Authority to review in accordance with regulations. During the period when the dispatch price for system operation and market transaction management has not been approved, the parties shall agree on provisional payment terms in the dispatch service contract for system operation and market transaction management until the dispatch price for system operation and market transaction management for the year is approved. The difference between the provisional payment and the payment according to the dispatch price for system operation and market transaction management for the year shall be settled by the parties after the dispatch price for system operation and market transaction management for the year is approved.

Article 13. Principles for applying regulated prices for system operation dispatch and electricity market transaction management

In the case where the regulated prices for system operation dispatch and electricity market transaction management for the year N ||| have not been approved before December 31 of the year N-1, the parties may agree on provisional payment terms in the system operation dispatch service contract and electricity market transaction management until such regulated prices for the year N ||| are approved. The parties may agree to apply the regulated prices for system operation dispatch and electricity market transaction management of the year N-1 for provisional payments. Any difference between the provisional payment and the payment based on the new regulated prices for system operation dispatch and electricity market transaction management (of the year N |||) shall be settled by the parties after the regulated prices for system operation dispatch and electricity market transaction management for the year N ||| are approved.

Article 14. Effective date

1. This Circular takes effect from July 31, 2024.

2. During the implementation of this Circular, if there are any difficulties, relevant units are requested to report to the Ministry of Industry and Trade for consideration and resolution./.