Circular No. 13/2017/TT-BCT amends and supplements some Articles of Circular No. 56/2014/TT-BCT on methods for determining power generation prices, procedures for inspecting power purchase and sale contracts; Circular No. 30/2014/TT-BCT on operating the competitive power generation market; and Circular No. 57/2014/TT-BCT on methods and procedures for building and issuing power generation price frameworks.

 

CIRCULAR

Amending and supplementingamending certain provisions of Circular No. 56/2014/TT-BCT on the method for determining power generation prices and the procedures for inspecting electricity purchase and sale contracts; Circular No. 30/2014/TT-BCT on the operationof the competitive power generation market 365/HC-VNV Circular No. 57/2014/TT-BCT on the method, procedures for establishing and promulgating the power generation price framework andPursuant to the Electricity Law dated December 3, 2004;etermining The Law amending and supplementing certain articles of the Electricity Law

Pursuant to Decree No. 95/2012/NĐ-CP dated November 12, 2012, of the Government, detailing the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

concerningthe roadmap, conditions dated November 20, 2012;

Based on Decree No. 137/2013/NĐ-CP dated October 21, 2013, issued by the Government, detailing the implementation of certain provisions of the Electricity Law and the Law Amending and Supplementing Certain Provisions of the Electricity Law;

Pursuant to Decision No. 63/2013/QĐ-TTg dated 08 the 11 Pursuant to Decree No. 32/2019/NĐ-CP dated April 10, 2019 of the Government on assigning tasks, procurement or tendering for the supply of products and services using state budget from regular operating expenses;13 of the Prime Minister and industry structure to form and develop various levels of the electricity market in Vietnam; The Minister of Industry and Trade issues this Circular to amend and supplement some provisions of Circular No. 56/2014/TT-BCT dated December 19, 2014 of the Minister of Industry and Trade on the method for determining power generation prices and the procedures for inspecting electricity purchase and sale contracts Circular No. 30/2014/TT-BCT dated October 2, 2014 of the Minister of Industry and Trade on operating the competitive power generation market and Circular No. 57/2014/TT-BCT dated December 19, 2014 of the Minister of Industry and Trade on the method, procedures for establishing and promulgating the power generation price framework

At the proposal of the Director of the Electricity Regulatory Authority,

Amending and supplementing some provisions of Circular No. 56/2014/TT-BCT dated December 19, 2014 of the Minister of Industry and Trade on the method for determining power generation prices and the procedures for inspecting electricity purchase and sale contracts (Circular No. 56/2014/TT-BCT) as follows:; 1. Amend Clause 10, add Clauses 17, 18, 19, 20, and 21 of Article 2 as follows:.

Clause 4 of Article 6is the total investment amount of the project approved for the first time.

Coal import contract

“10. Base year is an agreement between a power generation unit permitted to import coal according to the regulations of the competent state agency and a foreign coal trading unit to supply coal to the power plant, signed in accordance with current regulations, ensuring competitive and transparent pricing.

17. 18. Coal transportation contract for imported coal is an agreement between a power generation unit and a transportation unit to transport imported coal to the power plant, signed in accordance with current regulations, ensuring competitive and transparent pricing.

Domestic coal purchase and sale contract is an agreement between a power generation unit and a domestic coal trading unit or a domestic origin coal trading unit or an imported coal trading unit to supply coal to the power plant, signed in accordance with current regulations, ensuring competitive and transparent pricing.

19. Domestic coal transportation contract is an agreement between a power generation unit and a transportation unit to transport coal within the territory of Vietnam for the power plant, signed in accordance with current regulations, ensuring competitive and transparent pricing.

Date of commencement of construction works is the date recorded in the notice sent by the Project Owner to the construction permit issuing authority in accordance with Circular No. 15/2016/TT-BXD dated June 30, 2016 of the Ministry of Construction guiding the issuance of construction permits or any subsequent amendments, supplements, or replacements thereof.

21. 2.    Amend Point a Clause 2 Article 5 as follows: “a) Total investment: Determined based on the total investment amount of the project approved for the first time; excluding from the total investment of the project any costs for upgrading equipment to maintain power plant operations after 20 years of commercial operation.”

3.    Amend Clause 1 Article 7 as follows:

“1. The variable component of the adjusted price, which changes according to fluctuations in the main fuel cost of the power plant at the Base Year (VND/kWh), is determined according to the following formula:

: Average specific fuel consumption of the main fuel agreed upon by both parties based on the manufacturer's specifications or the warranty data of the EPC contractor or the test results of the unit by a testing unit authorized or decided by the competent state agency, corresponding to the load level specified in Appendix 1 of Circular No. 56/2014/TT-BCT (kg/kWh or BTU/kWh);

For power plants using coal from multiple contracts: The base calorific value of coal (NT (<amount>/kWh), determined according to the following formula:

Where:

       The base year fuel price is defined as follows:

- For domestic coal purchase and sale contracts: The coal price is the price at the unloading point of the supplier, including losses, management fees, insurance (if applicable), excluding transportation costs (VND/ton), converted to VND/kg for calculation purposes. If the coal purchase and sale contract cannot separate transportation costs, the base year fuel price is determined based on the domestic coal purchase and sale contract price;₀- For imported coal purchase and sale contracts or coal supplied from multiple contracts: The base coal price for calculating the electricity purchase and sale contract price is determined according to the coal purchase and sale contracts stipulated in Clause 15, Article 1 of this Circular;

: - For natural gas: The gas price is the price at the gas field (VND/BTU).”

- For domestic coal purchase contracts: The coal price is the price at the unloading point of the coal supplier, including losses, management fees, insurance (if applicable), excluding transportation costs (VND/ton), converted to VND/kg for calculation purposes. If the coal purchase contract cannot separate transportation costs, the base year fuel price shall be the price specified in the domestic coal purchase contract;

- For imported coal or coal from multiple contracts: The base coal price applied to calculate the electricity purchase contract price shall be determined according to the coal purchase contracts stipulated in Clause 15, Article 1 of this Circular;

- For gas fuel: The gas price is the price at the wellhead (VND/BTU).”

4. Amend Article 8 as follows:

“Article 8. Method for Determining the Price of Main Fuel Transportation for Thermal Power Plants

The price of main fuel transportation for power plant Year Base () shall be determined according to the following formula (VND/kWh):

´ 

Where:

:    Average fuel consumption rate of the main fuel for coal-fired thermal power plants (kg/kWh) or average heat consumption rate of the main fuel for gas turbine power plants (BTU/kWh), as specified in Clause 1, Article 7 of Circular No. 56/2014/TT-BCT;

:        The price of main fuel transportation for power generation Year Base, calculated in VND/ton, converted to VND/kg for calculation purposes for coal or calculated in VND/BTU for gas.

For coal under import contracts or supplied from multiple contracts: The base coal transportation price applicable to electricity purchase and sale contracts shall be determined according to Clause 15, Article 1 of this Circular.

5.    Amend Point b, Clause 2, Article 14 as follows:

“b) Fixed operation and maintenance cost component based on labor costs in month t, year j () determined as follows:

- In case the wage level calculated in the electricity pricing plan equals the minimum regional wage, the fixed operation and maintenance cost component based on labor costs shall be determined according to the method stipulated in Clause 2, Article 6 of Circular No. 56/2014/TT-BCT (VND/kWh);

Where:

:  Fixed operation and maintenance cost component based on labor costs shall be determined according to the method prescribed in Clause 2, Article 6 of Circular No. 56/2014/TT-BCT (VND/kWh);

:    Minimum regional wage at the time of payment in month t, year j (VND/person/month);

:        Minimum regional wage Year Base (VND/person/month).

- In case the wage level calculated in the electricity pricing plan exceeds the minimum regional wage or total labor costs TC_nc  are calculated based on the labor cost ratio of the power plant, then the fixed operation and maintenance cost component based on labor costs shall be determined according to the following formula (VND/kWh):

Where:

:  Fixed operation and maintenance cost component based on labor costs shall be determined according to the method prescribed in Clause 2, Article 6 of Circular No. 56/2014/TT-BCT (VND/kWh);

i:  Inflation rate of the fixed operation and maintenance cost component based on the national consumer price index (CPI) of Vietnam in year (

-1) compared to year (l-2) but not exceeding 2.5%/year, based on the national consumer price indexlfor December of the year immediately preceding year j, published on the National General Statistics Office's website;

:  Serial number of the payment year counted from Year Base (for Year Base

= 1, i

l6.    Amend Point a, Clause 3, Article 14 as follows: l “a) Variable adjustment cost component based on changes in the main fuel cost (coal, gas) of the power plant in month t, year j₁= 0).”

:       The variable adjustment cost component based on changes in the main fuel cost (coal, gas) of the power plant Year Base shall be determined according to the method prescribed in Clause 1, Article 7 of Circular No. 56/2014/TT-BCT (VND/kWh);

HS,j  (VND/kWh) is determined according to the following formula:

Where:

:          Efficiency reduction rate in year j (%);

k_{:          Main fuel cost (coal, gas) for power generation at the time of payment in month t, year j, calculated in VND/ton for coal or VND/BTU for gas;}                  For coal under import contracts or supplied from multiple contracts: Coal price at the time of payment in month t, year j as stipulated in Clause 15, Article 1 of this Circular;

:          Main fuel cost (coal, gas) for power generation at Year Base, determined according to Clause 1, Article 7 of Circular No. 56/2014/TT-BCT, calculated in VND/ton for coal or VND/BTU for gas.”

7.    Amend Clause 4, Article 14 as follows:

        “4. Main fuel transportation cost of the power plant in month t, year j

:          Main fuel transportation cost of the power plant Year Base shall be determined according to the method prescribed in Article 8 of Circular No. 56/2014/TT-BCT (VND/kWh);

:          Main fuel transportation cost (coal, gas) at the time of payment in month t, year j (VND/ton for coal or VND/BTU for gas);  (VND/kWh) is determined according to the following formula:

Where:

                      For coal under import contracts or supplied from multiple contracts: Coal price at the time of payment in month t, year j as stipulated in Clause 15, Article 1 of this Circular;

:          Main fuel transportation cost (coal, gas) at Year Base, calculated in VND/ton for coal or VND/BTU for gas.”

8.          Amend Point b, Clause 2, Article 15 as follows:

:  Fixed operation and maintenance cost component based on labor costs shall be determined according to the method prescribed in Clause 2, Article 11 of Circular No. 56/2014/TT-BCT (VND/kWh);

:       Minimum regional wage at the time of payment in month t, year j (VND/person/month);

“b) Fixed operation and maintenance cost component based on labor costs in month t, year j () determined as follows:

- In case the wage level calculated in the electricity pricing plan equals the minimum regional wage, the fixed operation and maintenance cost component based on labor costs shall be determined according to the method stipulated in Clause 2, Article 6 of Circular No. 56/2014/TT-BCT (VND/kWh);

Where:

i:               Inflation rate of the operation and maintenance cost based on the national consumer price index (CPI) of Vietnam in year (

-2) but not exceeding 2.5%/year, based on the national consumer price index for December of the year immediately preceding year j, published on the National General Statistics Office's website;

:        Minimum regional wage Year Base (VND/person/month).

- In case the wage level calculated in the electricity pricing plan exceeds the minimum regional wage or total labor costs TC_nc  are calculated based on the labor cost ratio of the power plant, then the fixed operation and maintenance cost component based on labor costs shall be determined according to the following formula (VND/kWh):

Where:

i:               Inflation rate of the operation and maintenance cost based on the national consumer price index (CPI) of Vietnam in year (

:               Serial number of the payment year counted from Year Base (for Year Basel-2) but not exceeding 2.5%/year, based on the national consumer price indexl9.  Amend Clause 1, Article 20 as follows:

l“1. The project investor of the power plant project shall be responsible for preparing the application dossier for negotiating the electricity purchase and sale contract to be sent to the buyer for negotiation and to carry out the procedures for examination and approval to sign the electricity purchase and sale contract before the construction commencement date of the project or before the power plant starts grid connection tests.” l “a) Variable adjustment cost component based on changes in the main fuel cost (coal, gas) of the power plant in month t, year j₁= 0).”.

9. Amend Clause 1 of Article 20 as follows:

“1. The project investor is responsible for preparing the negotiation proposal for the electricity purchase contract to be sent to the buyer for negotiation and to complete the necessary procedures for review and approval to sign the electricity purchase contract before the construction commencement date of the project or before the power plant conducts grid connection tests with the national power system.”

10. Amend Point d, Clause 1, Article 21 as follows:

"d) The decision approving the initial total investment amount of the project and the main contents in the basic design of the investment project related to the negotiation of the power purchase and sale contract, the report on the review of the basic design."

11. Amend Clause 1, Article 26 as follows:

"1. Submit to the Electricity Regulatory Authority for inspection of the power purchase and sale contract in accordance with regulations, complete signing of the power purchase and sale contract before the construction commencement date of the project or before the power plant conducts the grid connection test; bear responsibility and ensure the accuracy, reasonableness, and validity of the data and documents provided."

12. Amend Clause 1, Article 27 as follows:

"1. The project investors of power plants shall be responsible for:

a) Negotiating and signing the power purchase and sale contract before the construction commencement date of the project or before the power plant conducts the grid connection test;

b) Providing full information, bearing responsibility, and ensuring the accuracy, reasonableness, and validity of the data and documents provided during the negotiation and inspection process of the power purchase and sale contract;

c) Bearing full responsibility for all costs incurred during the project investment prior to the formal signing of the power purchase and sale contract;

d) Before signing a new coal transportation contract (including domestic and imported) or a new coal transportation price according to the power purchase and sale contract, the investor shall coordinate with the coal transportation unit or the coal trading unit, provide relevant legal documents regarding the selection process of the coal transportation unit in accordance with regulations, and provide calculation documents and separation of coal prices and transportation prices (in cases where coal is transported by conveyor belt) to Vietnam Electricity Corporation as the basis for comments on the coal transportation price during the implementation of fuel cost settlement. The investor shall bear responsibility and sign the coal transportation contract in accordance with current regulations, ensuring competitive and transparent pricing."

13. Add Clause 2b, Clause 2c, Clause 2d after Clause 2a, Article 28 as follows:

"2b. For power plants that commenced construction before February 3, 2015, which have power purchase and sale contracts but the electricity prices have expired, allow the application of the agreed total investment amount in the current electricity price scheme to calculate the electricity price of the power plant according to Circular No. 56/2014/TT-BCT. Within one year from the date of signing the amended and supplemented contract, the power plant investor must complete the final settlement of the project investment capital, complete negotiations on the power purchase and sale contract and electricity prices with Vietnam Electricity Corporation in accordance with relevant regulations.

2c. For power projects that have signed power purchase and sale contracts according to the calculation method prescribed in Circular No. 56/2014/TT-BCT, continue to apply the provisions of Circular No. 56/2014/TT-BCT, when the final settlement funds are available, both parties have the right to request recalculation of the electricity price based on the approved final investment cost.

2d. For new power plant projects that commence construction before this Circular takes effect, continue to apply the total investment amount calculation provisions for electricity price calculation at Circular No. 56/2014/TT-BCT and Circular No. 51/2015/TT-BCT."

14. Repeal Clause 9, Article 2, Clause 5, Article 3.

15. Repeal Clause 1, Article 22.

16. Add Appendix 1a as follows:

“ Appendix 1a

COAL PRICE AND COAL TRANSPORTATION PRICE FOR POWER PLANTS

1. Base coal price and base coal transportation price

a) Base coal price (VND/ton), converted to VND/kg for calculation purposes, determined as follows:

Where:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_0,m: For domestic coal purchase and sale contracts, the coal price is stipulated in Clause 3, Article 1 of this Circular.

For imported coal purchase and sale contracts: The coal price includes the FOB price specified in the imported coal purchase and sale contract, loss, management fee, insurance (if any) agreed upon by both the power buyer and seller, and taxes and fees as prescribed, but does not include transportation and transshipment costs. If the imported coal purchase and sale contract cannot separate the transportation cost, the base fuel price is determined by the price in the imported coal purchase and sale contract;

X₀: Exchange rate between foreign currency and Vietnamese dong at the time of determining the base coal price, for domestic coal purchase and sale contracts, value X₀ = 1;

V_{Granite, gabbro, decorative stone...}: Quantity of coal specified in the coal purchase and sale contracts (tons);

M: Total number of coal purchase and sale contracts.

b) Base coal transportation price (VND/ton), converted to VND/kg for calculation purposes, determined by the weighted average of the quantity and transportation price according to the imported coal transportation contract or domestic coal transportation contract, including:

For domestic coal transportation contracts, the coal transportation price is the transportation price or the transportation price from the domestic transshipment warehouse of the coal trading unit to the power plant according to the domestic coal transportation contract.

For imported coal transportation contracts, the coal transportation price with the exchange rate between foreign currency and Vietnamese dong at the time of determining the base coal transportation price is agreed upon by both the coal buyer and seller according to the imported coal transportation contract.

For coal purchase and sale contracts that include transportation costs, if the transportation cost can be separated, it is determined according to the corresponding coal purchase and sale contract. If the transportation cost cannot be separated, the corresponding transportation cost is zero (0).

2. Coal price and coal transportation price at payment time

a) Coal price at payment time (VND/ton), determined as follows:

Where:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{m, j,t}The coal price at the time of payment is calculated as the weighted average price based on quantity (VND/ton), determined as follows:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_qThe coal price is determined according to the coal invoice issued by the seller in accordance with the import coal purchase contracts or domestic coal purchase and sale contracts arising in the payment month. organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.including the cost components specified in Point a Section 1 of the Appendix hereto, for domestic coal purchase and sale contracts, the exchange rate X_{Minimum wage level of the region at the time of payment month t, year j (VND/month);} in this case corresponds to 1); herein corresponds to 1);

X_{Minimum wage level of the region at the time of payment month t, year j (VND/month);}The foreign currency exchange rate of the Vietnamese dong and the foreign currency used to purchase coal in the payment month , is determined at the time of issuing the coal invoice according to the selling rate of the commercial bank agreed upon by the buyer and seller of electricity;

NT₀The base calorific value of coal (kcal/kg) is determined in accordance with Clause 3 Article 1 of this Circular;

NT_,The average calorific value of coal in the purchase and sale contracts in the payment month (kcal/kg) is determined as the weighted average based on the quantity of coal V_q and the actual calorific value received, converted to the gross calorific value on an as-received basis of the corresponding purchase and sale contracts, as shown in the coal invoices and quality certificates of the coal issued in the payment month (kcal/kg). organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular. ,

Article 24The total number of valid coal invoices arising in the payment month; organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.;

V_qThe quantity of coal (tons) adjusted for moisture content in the purchase and sale contracts as shown in the coal invoices q arising in the payment month; organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular..

The coal transportation price at the time of payment (VND/ton) is determined as follows:

Where:

NT₀The base calorific value of coal (kcal/kg) is determined in accordance with Clause 3 Article 1 of this Circular;

NT_,The average calorific value of coal in the purchase and sale contracts in the payment month (kcal/kg) is determined in accordance with Point a of this Section;

The coal transportation price at the time of payment (VND/ton) is determined as the weighted average based on the coal transportation prices and the quantity of coal adjusted for moisture content in the transportation invoices arising in the payment month organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular. of the import coal transportation contracts or domestic coal transportation contracts.

For coal purchase and sale contracts that include the coal transportation price, if the transportation price can be separated, it shall be determined in accordance with the relevant purchase and sale contract. If the transportation price cannot be separated, the corresponding transportation price is zero (0).

Amend Clause 2 Article 2 of the Model Electricity Purchase and Sale Contract issued together with Circular No. 56/2014/TT-BCT (Appendix 3) as follows:

"2. Duration of the Contract

The duration of the Contract is from the date the Contract becomes effective until the end of 25 years from the Commercial Operation Date of the Power Plant."

Article 2. Amend and supplement some provisions of Circular No. 57/2014/TT-BCT dated December 19, 2014, of the Minister of Industry and Trade on the method and procedure for developing and promulgating the power generation pricing framework (Circular No. 57/2014/TT-BCT) as follows:

Repeal Clause 5 Article 2.

Amend Clause 3 Article 6 as follows:

"3. Capital cost is the investment cost for 01 kW of average capacity of the standard power plant calculated based on the approved project investment ceiling, updated with the foreign currency exchange rate at the time of calculation. The components of capital cost include:

a) Construction costs including costs for construction of works and sub-works; demolition and removal of old building materials; land leveling for construction; temporary construction works; auxiliary works for construction; temporary housing at the site for living and construction management;

b) Equipment costs including costs for purchasing and installing technology equipment, training for operation of the plant; installation, testing, calibration; transportation, insurance, taxes, and other related fees;

c) Land acquisition compensation costs and resettlement costs as decided by competent state authorities; foundation reinforcement and treatment costs;

d) Project management costs including costs for organizing and implementing project management work from project initiation to completion and handover for operation;

đ) Construction consultancy costs including costs for survey, design, construction supervision, audit consultancy, and other investment construction consultancy costs;

e) Other costs including working capital during the trial operation period, interest costs, and other borrowing costs during the construction period of the power plant, and other necessary costs;

g) Contingency costs including costs for additional work volume and contingency for inflation factors during the construction period."

Article 3. Amend and supplement some provisions of Circular No. 30/2014/TT-BCT dated October 2, 2014, of the Minister of Industry and Trade on competitive power generation market operations (Circular No. 30/2014/TT-BCT) as follows:

1. Amend Clause 50 Article 3 as follows:

“50. Strategic multi-purpose hydropower plant is a hydropower plant defined in Decision No. 2012/QĐ-TTg dated October 24, 2016, of the Prime Minister approving the list of large power plants of special importance to the economy, society, national defense, and security, and Decision No. 4712/QĐ-BCT dated December 2, 2016, of the Minister of Industry and Trade approving the list of hydropower plants operating in conjunction with large power plants of special importance to the economy, society, national defense, and security."

2. Amend Clause 3 Article 17 as follows:

"3. The variable cost of thermal power units is determined as follows:

In cases where the specific fuel consumption value can be determined, the variable cost of the unit is determined as follows:

Where:

The component of the variable price adjusted for fluctuations in the main fuel cost (coal, gas) of the power plant (VND/kWh);

||| The adjustable price component adjusted according to fluctuations in auxiliary fuel (oil) costs of the power plant (VND/kWh);

||| The adjustable price component adjusted according to other fluctuations of the power plant (VND/kWh).

||| - The adjustable price component adjusted according to fluctuations in primary fuel costs of the power plant (VND/kWh), determined based on the following formula: |||

Where:

||| The average specific fuel consumption rate of primary fuel agreed upon by both parties based on the manufacturer's specifications or the warranty specifications of the EPC contractor or the test results of the unit tested by an entity authorized or decided by the competent state agency, corresponding to the load level specified in Appendix 1 of Circular No. 56/2014/TT-BCT (kg/kWh or BTU/kWh);

||| For power plants using coal from various sources including imported coal and domestic coal: The basic calorific value of coal (NT) used to calculate the average specific fuel consumption rate is calculated as the weighted average based on volume and converted calorific value, as stipulated in coal purchase and sale contracts (kcal/kg).₀|||

: ||| The primary fuel price includes transportation costs for primary fuel.

||| - The adjustable price component adjusted according to fluctuations in auxiliary fuel costs of the power plant: |||

Where:

||| The average specific fuel consumption rate of auxiliary fuel (oil) agreed upon by both parties based on the manufacturer's specifications (kg/kWh);

||| The auxiliary fuel (oil) price includes transportation fees and other charges as prescribed (VND/kg).

||| - The average specific fuel consumption rate of fuel (primary and auxiliary) provided by the sole bulk buyer and adjusted according to the efficiency degradation factor. In cases where the heat rate in the contract is the average lifetime project heat rate, it will not be adjusted according to the efficiency degradation factor. If the contract or negotiation documentation only has characteristic curves at certain load levels, the heat rate of the units will be determined at the load level corresponding to the average annual electricity generation of the power plant as stipulated in the electricity purchase and sale contract.

||| In cases where thermal power units do not have heat rate data in the contract or in the negotiation documentation for the electricity purchase and sale contract, the heat rate of such power plants will be determined by the standard power plant's heat rate of the same technology and capacity group. The system operator and electricity market entity is responsible for calculating the heat rate of the standard power plant.

||| - The efficiency degradation factor of thermal power units is determined based on the efficiency degradation factor in the contract or in the negotiation documentation for the electricity purchase and sale contract provided by the sole bulk buyer.

||| In cases where thermal power plants do not have efficiency degradation factor data in the contract or in the negotiation documentation for the electricity purchase and sale contract, the efficiency degradation factor of the standard power plant of the same group will be applied, as determined by the system operator and electricity market entity.

||| - The adjustable price component adjusted according to other fluctuations of the power plant: (VND/kWh) is determined according to the following formula:

Where:

C_vlp||| The total annual auxiliary material cost of the power plant determined based on the quantity and unit price of auxiliary materials used for power generation (VND);

C_kd||| The total start-up cost including fuel costs and other start-up costs (VND);

C_k||| Annual maintenance and repair costs calculated based on the total investment capital for construction and equipment of the power plant and the regular maintenance cost ratio as stipulated in Appendix 1 of Circular No. 56/2014/TT-BCT (VND);

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_|||||| The net capacity of the power plant (kW);

k_CS||| The average capacity reduction rate over the entire economic life of the power plant determined according to Point c Clause 2 Article 5 of this Circular (%);

d.1. Amount of taxable income in Vietnam:_max||| The average maximum capacity operation time in a year over many years throughout the power plant's project life (hours) and stipulated in Appendix 1 of Circular No. 56/2014/TT-BCT.

||| b) In cases where there is no heat rate data in the contract or in the negotiation documentation for the electricity purchase and sale contract and no suitable standard power plant in the same group, the variable cost of the unit is determined by the adjustable price (including primary fuel transportation costs) in the contract updated with factors affecting the adjustable price of year N according to the method agreed upon in the contract.”

3. ||| Amend Clause 1 and Clause 2 of Article 22 as follows:

||| "1. The ceiling bid price of thermal power units is determined based on the following formula:

Where:

||| The ceiling bid price of thermal power units (VND/kWh);

signing and implementing Agreements_DC||| The price adjustment coefficient according to the classification result of thermal power units. For base-load thermal power units K_DC = 0%; for peak-shaving thermal power units K_DC = 5%; for peak-load thermal power units K_DC = 20%;

2. P_NLCThe primary fuel price (including primary fuel transportation costs) of thermal power units (VND/kCal or VND/BTU);

3. P_NLPThe auxiliary fuel price of thermal power units (VND/kCal or VND/BTU);

HR_CThe specific primary fuel consumption rate at the average load of thermal power units (BTU/kWh or kCal/kWh);

HR_{"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:}The specific auxiliary fuel consumption rate at the average load of thermal power units (BTU/kWh or kCal/kWh).

2. In cases where there is no heat rate data in the contract or in the negotiation documentation for the electricity purchase and sale contract and no suitable standard power plant in the same group:

a) The ceiling bid price of thermal power units is determined based on the following formula:

Where:

||| The ceiling bid price of thermal power units (VND/kWh);

signing and implementing Agreements_DC||| The price adjustment coefficient according to the classification result of thermal power units. For base-load thermal power units K_DC = 0%; for peak-shaving thermal power units K_DC = 5%; for peak-load thermal power units K_DC = 20%; 

The adjustable price (including primary fuel transportation costs) for year N according to the electricity purchase and sale contract of the power plant (VND/kWh).

b) The fluctuating price (including the main fuel transportation cost) used to calculate the maximum allowable price for bidding is the anticipated fluctuating price for year N provided by the sole bulk buyer to the system operator and electricity market.

4. Add Article 37a following Article 37 as follows:

"Article 37a. Adjustment of hourly contract output

1. Circumstances for considering adjustments to hourly contract output (Qc hour):

a) In case of boiler failure in coal-fired thermal power units with multiple boilers or unit failure at power plants;

b) In case of prolonged repair time for boilers in coal-fired thermal power units with multiple boilers or units at power plants beyond the approved plan and included in the calculation of hourly contract output.

2. In cases where there is sufficient evidence to confirm the circumstances specified in Point a Clause 1 of this Article, the adjustment of hourly contract output shall be carried out according to the following principles:

a) In case the duration of the incident is less than or equal to 72 hours (equivalent to 72 trading cycles): No adjustment to the hourly contract output (Qc) of the power plant;

b) In case the duration of the incident exceeds 72 hours:

- During the period from the time of the incident to the 72nd trading cycle: Maintain the allocated hourly contract output (Qc) for the power plant;

- During the period from the 73rd trading cycle until the unit has resolved the incident and is available:

+ If the actual output at the delivery point (Qmq) of the power plant is lower than the hourly contract output (Qc) of the power plant during this period, adjust the hourly contract output based on the actual output (Qmq) of the power plant;

+ If the actual output at the delivery point (Qmq) of the power plant is greater than or equal to the hourly contract output (Qc) of the power plant during this period, do not adjust the hourly contract output of the power plant.

3. In cases where there is sufficient evidence to confirm the circumstances specified in Point b Clause 1 of this Article, the adjustment of hourly contract output shall be carried out according to the following principles:

During extended repair periods, if there is a trading cycle where the actual output at the delivery point (Qmq) of the power plant is lower than the hourly contract output (Qc) of the power plant, adjust the hourly contract output for those cycles based on the actual output (Qmq) of the power plant.

4. Power generation units directly trading have the responsibility to cooperate with the system operator and electricity market to confirm the events specified in Clause 1 of this Article according to the procedures for confirming events serving payments on the market issued by the Director of the Electricity Regulatory Authority and send them to the sole bulk buyer and power generation units directly trading to serve as the basis for adjusting the hourly contract output of the power plant. For cases confirming boiler incidents in coal-fired thermal power units with multiple boilers:

a) In case there is sufficient data from the distributed control system (DCS system) or equivalent control systems for this event: Confirm the event based on these data;

b) In case there is no data from the distributed control system (DCS system) or equivalent control systems: Use information and data from other sources for each specific case according to the procedures for confirming events serving payments on the market issued by the Director of the Electricity Regulatory Authority to confirm the event.

5. The sole bulk buyer and power generation units directly trading have the responsibility to reconfirm the monthly contract output and hourly contract output of the power plant adjusted according to Clause 1, Clause 2, and Clause 3 of this Article."

5. Amend Clause 12, add Clause 14 of Article 80 as follows:

"12. For power plants with generating units separated from the national power grid and connected to foreign power grids, based on the results of the system operation calculation for the next year by the system operator and electricity market, participation in the electricity market for the next year and payment to the power plant will be regulated as follows:

a) In case, according to the results of the system operation calculation for the next year, the power plant with units connected to foreign power grids is expected to be connected for more than 180 days in the next year, then completely separate the entire power plant from the electricity market for the next year. The entire output of the power plant in the next year will be paid according to the electricity price in the signed power purchase agreement with the sole bulk buyer;

b) In case, according to the results of the system operation calculation for the next year, the power plant with units connected to foreign power grids is expected to be connected for less than 180 days in the next year, the power plant must participate in the electricity market for the next year (as a direct trading power generation unit). For trading days in the year when the power plant's generating units are separated from the national power grid and connected to foreign power grids, the entire output of the power plant on trading days when the units are separated from the national power grid and connected to foreign power grids will be paid according to the electricity price in the signed power purchase agreement with the sole bulk buyer.

14. In case power plants with generating units participating in automatic generation control (AGC) system testing upon request of the system operator and electricity market, completely separate the entire power plant from the electricity market, the entire output fed into the grid during the testing cycles will be paid according to the contract purchase price (full price Pc) signed with the sole bulk buyer. Before December 1st of year N-1, the system operator and electricity market have the responsibility to establish and publish a list of generating units expected to participate in AGC system testing in year N for market participants."

6. Add Chapter VIa (after Chapter VI) in Circular No. 30/2014/TT-BCT as follows:

 “Chapter VIa

MECHANISMS FOR PARTICIPATING IN THE COMPETITIVE POWER GENERATION MARKET

 FOR POWER PLANTS LOCATED WITHIN INDUSTRIAL ZONES

Article 88a. Obligations to participate in the power market

Power generation units owning power plants located within industrial zones (hereinafter referred to as power generation units), with installed capacity greater than 30 MW, connected to the national power grid and selling part of their production to the national power grid (except for cases where they have signed power purchase agreements before January 1, 2016, and these agreements remain valid beyond January 1, 2016, as stipulated in Clause 1, Article 1 of Circular No. 51/2015/TT-BCT dated December 29, 2015, issued by the Minister of Industry and Trade amending and supplementing certain provisions of Circular No. 30/2014/TT-BCT dated October 2, 2014, and Circular No. 56/2014/TT-BCT dated December 19, 2014, issued by the Minister of Industry and Trade on the operation of the competitive power generation market and the method for constructing power generation prices and procedures for inspecting power purchase agreements (Circular No. 51/2015/TT-BCT)) shall be responsible for:

1. Registering to participate in the power market in accordance with Circular No. 30/2014/TT-BCT and Clauses 2, 3, and 4, Article 1 of Circular No. 51/2015/TT-BCT.

2. Investing and completing equipment systems to connect to the power market information system, SCADA/EMS system, and electricity metering system to determine the amount of electricity generated by each power generation unit and the electricity consumption of local loads, meeting the operational requirements of the power market as stipulated in Clause 5, Article 4 of Circular No. 30/2014/TT-BCT.

3. Implementing the regulations on the operation of the competitive power generation market set forth in Circular No. 30/2014/TT-BCT and Circular No. 51/2015/TT-BCT when participating in the power market.

4. Signing power purchase agreements in accordance with Circular No. 56/2014/TT-BCT, Circular No. 51/2015/TT-BCT, and this Decree.

Article 88b. Planning for next year's, next month's, and next week's operations

1. Power generation units shall be responsible for providing the System Operator and the power market with data to serve the calculation and planning of next year's, next month's, and next week's power market operations in accordance with Chapter IV of Circular No. 30/2014/TT-BCT, Article 1 of Circular No. 51/2015/TT-BCT, and the procedures for managing and operating the information technology system for power market dispatch and information disclosure issued by the Director of the Electricity Regulatory Authority.

2. Before July 15th each year, power generation units shall be responsible for providing the System Operator and the power market with the forecasted internal load demand for each month of the following year.

3. Before the 20th day of each month, power generation units shall be responsible for providing the System Operator and the power market with the forecasted internal load demand for the following month.

4. The System Operator and the power market shall be responsible for calculating and announcing the ceiling price for the next month's bids for power plants located within industrial zones participating in the power market in accordance with Article 35 of Circular No. 30/2014/TT-BCT and Clause 7, Article 1 of Circular No. 51/2015/TT-BCT.

Article 88c. Operation of the power market for the next day and the next hour

1. Power generation units shall be responsible for implementing the regulations on the operation of the power market for the next day and the next hour as stipulated in Chapter V of Circular No. 30/2014/TT-BCT.

2. Before 14:00 on D-2, power generation units shall be responsible for providing the System Operator and the power market with the forecasted internal load demand curve for power plants located within industrial zones during each trading cycle of day D. The permissible forecast error for internal load demand is +/-10%. During the period when internal load is undergoing testing or new investment, the permissible forecast error for internal load demand is +/-15%.

3. Day-ahead bidding: Power generation units shall be responsible for preparing and submitting to the System Operator and the power market the bid for power plants located within industrial zones in accordance with Articles 41 and 45 of Circular No. 30/2014/TT-BCT, and the power generation units shall be responsible for:

a) Offering for sale the entire available capacity of each power generation unit;

b) Offering prices for internal loads:

- In case the internal load is higher than the lowest stable output of one unit, offer a price of 0 VND/kWh for the expected capacity mobilized to supply internal loads;

- In case the internal load is lower than the lowest stable output of one unit, offer a price of 0 VND/kWh for the lowest stable output;

c) Remaining excess capacity: The bid price must comply with the minimum bid price for thermal power units stipulated in Article 10 of Circular No. 30/2014/TT-BCT and the maximum bid price announced by the System Operator and the power market in accordance with Clause 4, Article 88b of this Chapter;

d) Using one or more units to offer prices for the capacity to meet internal loads. If the capacity of one unit is insufficient to meet internal loads, the power generation unit may use the bid of the subsequent unit to offer prices to meet internal loads;

đ) Power generation units shall be responsible for preparing bid prices for power generation units that comply with technical constraints of the units, technical constraints stipulated in power purchase agreements, and constraints related to steam loads of the plant (if applicable).

4. Hour-ahead bidding: Power generation units shall prepare and submit to the System Operator and the power market the hour-ahead bid for power plants located within industrial zones and updated internal loads for the next hour. Power generation units shall be responsible for updating the hour-ahead bid and internal loads at least 45 minutes before the trading cycle.

Article 88d. Scheduling and Real-time Dispatch Time

1. The system operator and electricity market establish the scheduling of power plants in industrial zones based on the bidding prices of power generation units and according to the provisions of Sections 1, 2, and 3 of Chapter V of Circular No. 30/2014/TT-BCT.

2. Prior to the trading cycle, power generation units can update their actual load increase and decrease rates (in the upcoming hourly bids) to serve scheduling, real-time dispatch, and calculation of payments in the electricity market.

3. In cases of excess capacity, the system operator and electricity market will mobilize power plants not lower than local demand. If the local demand is lower than the minimum stable capacity, the system operator and electricity market will mobilize power plants at the minimum stable capacity of the unit.

Article 88e. Calculation of Payments in the Electricity Market

1. Calculation of power plant production for payment in the electricity market, including:

a) Electricity quantity paid according to the bid price for power plants in industrial zones with bid prices higher than the market ceiling price (Qbp) during trading cycle i: Determined according to Clause 3, Article 70 of Circular No. 30/2014/TT-BCT;

b) Additional electricity generation quantity (Qcon) during trading cycle i: Determined according to Clause 4, Article 70 of Circular No. 30/2014/TT-BCT;

c) Electricity generation quantity different from the dispatch command (Q_du) during trading cycle i: Determined according to Clause 2, Article 70 of Circular No. 30/2014/TT-BCT and Clause 2, Article 47 of the Scheduling Mobilization Procedure, Real-time Operation, and Calculation of Payments in the Electricity Market issued by the Director of the Electricity Regulatory Authority. Use extreme metering devices to determine dispatch command errors;

d) Electricity quantity paid according to the market electricity price (SMP) during the trading cycle is determined as follows:

- When Qdu_{international} > 0: Qsmp_{international} = Qm_{international} - Qdu_{international} – Qcon_{international} - Qbp_{international}

- When Qdu_{international} ≤ 0: Qsmp_{international} = Qm_{international} - Qcon_{international} - Qbp_{international}

Where:

Qm_{international}: Electricity quantity fed into the grid during trading cycle i (determined based on measured electricity quantity at the delivery point during the trading cycle);

Qdu_{international}: Electricity quantity generated differently from the dispatch command during trading cycle i;

Qbp_{international}: Electricity quantity paid according to the bid price during trading cycle i for power plants in industrial zones with bid prices higher than the market ceiling price (kWh);

Qcon_{international}: Additional electricity generation quantity of power plants in industrial zones during trading cycle i (kWh);

đ) Electricity quantity paid according to the differential electricity purchase and sale contract price for power plants in industrial zones during each trading cycle i is determined as follows:

Qc_{international} = Qhc_{international} × β

Where:

Qc_{international}: Electricity quantity paid according to the differential electricity purchase and sale contract price for power plants in industrial zones during each trading cycle i (VND);

β: Ratio of electricity quantity paid according to the contract price for power plants in industrial zones specified by the Electricity Regulatory Authority for each power plant in industrial zones based on technology type and geographical location.

Qhc_{international}: Adjusted electricity quantity during trading cycle i (kWh) determined as follows:

- When Qdu_{international} > 0, Qhc_{international} = Qm_{international} - Qdu_{international};

- When Qdu_{international} ≤ 0, Qhc_{international} = Qm_{international}.

Where:

Qm_{international}: Electricity quantity fed into the grid during trading cycle i (determined based on measured electricity quantity at the delivery point during the trading cycle).

2. The components of electricity quantity serving payment in the electricity market as stipulated in Clause 1 of this Article shall be adjusted according to Article 71 of Circular No. 30/2014/TT-BCT.

3. Payment amounts for power plants in industrial zones during each trading cycle and settlement period include:

a) Electricity market payment;

b) Capacity market payment;

c) Payment according to the differential electricity purchase and sale contract price;

d) Other payments (if any).

4. The electricity market payment amount for each trading cycle is calculated as follows:

   Rg_{international} = Rsmp_{international} + Rbp_{international} + Rcon_{international} + Rdu_{international}

Where:

Rg_{international}: Electricity market payment amount for power plants in industrial zones during each trading cycle i (VND);

Rsmp_{international}: Payment amount for the portion of electricity quantity paid according to the market electricity price (SMP) of power plants during trading cycle i calculated according to Circular No. 30/2014/TT-BCT (VND);

Rbp_{international}: Payment amount for the portion of electricity quantity paid according to the bid price for power plants with bid prices higher than the market ceiling price during trading cycle i calculated according to Circular No. 30/2014/TT-BCT (VND);

Rcon_{international}: Payment amount for the additional electricity generation quantity during trading cycle i calculated according to Circular No. 30/2014/TT-BCT (VND);

Rdu_{international}: Payment for electricity generation quantity different from the mobilized quantity according to the dispatch command during trading cycle i calculated according to Circular No. 30/2014/TT-BCT (VND);

β: Ratio of electricity quantity paid according to the contract price for power plants in industrial zones specified by the Electricity Regulatory Authority for each power plant in industrial zones based on technology type and geographical location.

5. The capacity market payment amount for each trading cycle is calculated as follows:

Rcan_{international} = Qm_{international} × CAN_{international}

Where:

Rcan_{international}: Capacity payment amount for power plants in industrial zones during each trading cycle i (VND);

Qm_{international}: Electricity quantity fed into the grid during trading cycle i (determined based on measured electricity quantity at the delivery point during the trading cycle);

CAN_{international}: Capacity market price during trading cycle i (VND/kWh);

6. The payment amount according to the differential electricity purchase and sale contract price for each trading cycle is calculated as follows:

Rc_{international} = Qc_{international} × (Pc – SMP_{international} – CAN_{international})

Where:

Rc_{international}: Payment amount according to the differential electricity purchase and sale contract price for power plants in industrial zones during each trading cycle i (VND);

Qc_{international}: Electricity quantity paid according to the differential electricity purchase and sale contract price for power plants in industrial zones during each trading cycle i determined according to Point đ, Clause 1 of this Article (VND);

Pc: Contract price for electricity purchase and sale (VND/kWh);

SMP_{international}: Electricity price in the market during trading cycle i (VND/kWh);

CAN_{international}: Capacity market price during trading cycle i (VND/kWh);

7. For other payment amounts (if any), except for start-up cost payments due to excess capacity implemented according to Article 80 of Circular No. 30/2014/TT-BCT and Clause 24, Article 1 of Circular No. 51/2015/TT-BCT.

8. The power generation unit is responsible for calculating the payment amount according to the electricity purchase and sale contract price. The system operation unit and the electricity market operation unit are responsible for calculating the electricity energy and capacity market payment amount.

9. The power generation unit shall cooperate with the system operation unit and the electricity market operation unit, the sole bulk electricity purchasing entity to perform the calculation of payments, reconcile and verify the payment statement, and carry out payments in accordance with the procedures prescribed in Chapter VI of Circular No. 30/2014/TT-BCT.

Article 4. Repeal Clause 7, Clause 9, and Clause 19 of Article 1 of Circular No. 51/2015/TT-BCT dated December 29, 2015, issued by the Minister of Industry and Trade to amend and supplement certain provisions of Circular No. 30/2014/TT-BCT dated October 2, 2014, and Circular No. 56/2014/TT-BCT dated December 19, 2014, both issued by the Minister of Industry and Trade, concerning the operation of competitive power generation markets and the method of constructing power generation prices, and the procedures for inspecting electricity purchase and sale contracts.

The Vietnam Electricity Corporation shall not implement provisional payments or pay electricity charges to power plants when operating and feeding electricity into the grid without officially signing an electricity purchase and sale contract. In cases where these power plants must be mobilized due to requirements to ensure electricity supply security, the Vietnam Electricity Corporation shall be responsible for reporting to the Ministry of Industry and Trade, coordinating with the power generation units to carry out mobilization, operation, and payment of electricity charges to the power plants.

Article 5. Transitional Provisions

The term of the electricity purchase and sale contract for power plant projects that have signed electricity purchase and sale contracts before the effective date of this Circular shall be converted by the Vietnam Electricity Corporation and the power generation units according to the contract term specified in Clause 16 of Article 1 of this Circular; other contents of the electricity purchase and sale contract and electricity prices shall remain unchanged.

Article 6. Effectiveness

1. This Circular takes effect from the date of  19   month  9  year 2017.

2. During implementation, if any difficulties arise, organizations and individuals concerned shall reflect them to the Ministry of Industry and Trade for supplementation and amendment to make them appropriate./.