Consolidated Document number 27/VBHN-BCT stipulates the method and procedure for establishing and promulgating the electricity generation price framework.

CIRCULAR

Specifies the method and procedure for establishing and promulgating the electricity generation price framework

Circular No. 57/2014/TT-BCT dated December 19, 2014, issued by the Minister of Industry and Trade, specifies the method and procedure for establishing and promulgating the electricity generation price framework, which took effect from February 3, 2015, has been amended and supplemented by:

1. Circular No. 13/2017/TT-BCT dated August 3, 2017, issued by the Minister of Industry and Trade, amending and supplementing certain articles of Circular No. 56/2014/TT-BCT on the method for determining the electricity generation price and the procedure for inspecting power purchase and sale contracts; Circular No. 30/2014/TT-BCT on operating the competitive electricity generation market; and Circular No. 57/2014/TT-BCT on the method and procedure for establishing and promulgating the electricity generation price framework, which took effect from September 19, 2017;

2. Circular No. 31/2022/TT-BCT dated November 8, 2022, issued by the Minister of Industry and Trade, amending and supplementing certain articles of Circular No. 57/2014/TT-BCT dated December 19, 2014, issued by the Minister of Industry and Trade, on the method and procedure for establishing and promulgating the electricity generation price framework, and Circular No. 57/2020/TT-BCT dated December 31, 2020, issued by the Minister of Industry and Trade, on the method for determining the electricity generation price and power purchase and sale contracts, which took effect from December 28, 2022.

3. Circular No. 20/2024/TT-BCT dated October 10, 2024, issued by the Minister of Industry and Trade, specifies the method for establishing the electricity generation price framework for solid waste power plants and biomass power plants, which takes effect from November 26, 2024.

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;

Based on the Electricity Law dated December 3, 2004, and the Law Amending and Supplementing Certain Provisions of the Electricity Law 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;

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

The Minister of Industry and Trade issues this Circular to specify the method and procedure for establishing and promulgating the electricity generation price framework.[1]

Chapter I. GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Circular stipulates the method and procedure for establishing and promulgating the annual electricity generation price framework.

2. This Circular applies to the following entities:

a)[2] Power generation units owning power plants connected to the national grid with installed capacity exceeding 30 MW, power plants with installed capacity of 30 MW or less voluntarily participating in the electricity market, except strategic multi-purpose hydropower plants, oil-fired power plants, independent power plants invested under the Build-Operate-Transfer (BOT) model, renewable energy power plants (wind, solar, geothermal, tidal, solid waste, and biomass), and power plants with special mechanisms prescribed by the Prime Minister, the Ministry of Industry and Trade, or competent state management agencies;

b) Other organizations and individuals related thereto.

Article 2. Interpretation of Terms

In this Circular, the following terms shall be understood as follows:

1. Rated capacity is the installed capacity converted to the metering point for electricity purchase and sale settlement between the seller and buyer (kW).

2.[3] Reference power plant is a thermal power plant with a common installed capacity scale determined in the National Electricity Development Plan, representing a type of thermal power plant with the same power generation technology and fuel type, and used to calculate the electricity generation price framework for that type of power plant.

3. Maximum capacity operation hours (T_max) is the number of maximum capacity operation hours in a year averaged over the project lifetime of the reference power plant and specified in Appendix 1 of this Circular (hours).

4.[4] Total investment cost is the entire construction investment cost of the project determined according to current laws, consistent with the basic design and other contents of the Feasibility Study Report for Investment Construction.

5.[5] (Repealed)

Chapter II. METHOD FOR ESTABLISHING THE ELECTRICITY GENERATION PRICE FRAMEWORK

Article 3. Principles for Establishing the Electricity Generation Price Range

1. The electricity generation price range is a band of values from 0 (zero) to the ceiling price of each type of thermal power plant and hydropower plant, established and issued annually.

2.[6] For thermal power plants: the ceiling price is the electricity generation price of the Standard Power Plant, the method for determining the electricity generation price of the Standard Power Plant is specified in Article 5, Article 6, Article 7 and Article 8 of this Circular.

3. For hydropower plants: the ceiling price is based on the annual avoidable cost price according to the method prescribed in Article 9 of this Circular.

Article 4. [7] (repealed)

Article 5. Method for Determining the Electricity Generation Price of the Standard Power Plant

The electricity generation price P^CP (VND/kWh) of the Standard Power Plant is determined by the following formula:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:^CP = FC + FOMC + VC

Where:

FC: The average fixed price of the Standard Power Plant is determined according to the method prescribed in Article 6 of this Circular (VND/kWh);

FOMC: The fixed operation and maintenance price of the Standard Power Plant is determined according to the method prescribed in Article 7 of this Circular (VND/kWh);

VC: The variable price of the year applying the price range of the Standard Power Plant is determined according to the method prescribed in Article 8 of this Circular (VND/kWh).

The electricity generation price of the Standard Power Plant does not include the fuel transportation price.

Article 6. Method for Establishing the Average Fixed Price of the Standard Power Plant

1. The average fixed price FC (VND/kWh) of the Standard Power Plant is a component for recovering investment costs, determined by the following formula:

Where:

TCVĐT: Investment capital cost for constructing the Standard Power Plant (excluding value-added tax) converted evenly each year as prescribed in Clause 2 of this Article (VND);

Abp: Annual average energy at the delivery point determined according to the provisions of Clause 5 of this Article (kWh).

2. The investment capital cost of the Standard Power Plant converted evenly each year TC_VĐT (VND) is calculated by the following formula:

Where:

SĐT: The investment rate of the Standard Power Plant determined according to the provisions of Clause 3 of this Article (VND/kW);

Pt: Total refined capacity of the Standard Power Plant (kW);

n: Economic life of the Standard Power Plant prescribed in Appendix 1 attached to this Circular (years);

i: Financial discount rate of the Standard Power Plant determined according to the provisions of Clause 4 of this Article (%).

3.[8] The investment rate is the investment cost for 01 kW of refined capacity of the Standard Power Plant (excluding port and infrastructure costs, costs related to storage, regeneration, and transportation of LNG from the port to the power plant) calculated based on data from the approved feasibility study report for construction investment, the total investment amount effective at the time of calculating the electricity generation price range, or actual data from power purchase and sale contract negotiations (if any), updated foreign exchange rates at the time of calculation. 4. The financial discount rate i (%) applied to the weighted average cost of capital before tax is determined by the following formula:

D: The proportion of borrowed capital in the total investment amount prescribed in Appendix 1 of this Circular (%);

Where:

E: The proportion of equity contribution in the total investment amount prescribed in Appendix 1 of this Circular (%);

n: Economic life of the Standard Power Plant prescribed in Appendix 1 of this Circular (years);

: Average loan repayment period prescribed in Appendix 1 of this Circular (years);

For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract._{Domestic air passenger transport service on regular basic economy class}: Loan interest rate determined according to Point a of this Clause (%);

F_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;}: Pre-tax return on equity determined according to Point b of this Clause (%).

F_{Average loan repayment period is 10 years;}The loan interest rate r

a)[9] (%) is calculated as the weighted average interest rate of domestic and foreign currency loans according to the following formula:_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;} x r

F_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;} Proportion of domestic currency (Vietnamese Dong) loan capital in total loan capital as specified in the Appendix attached to this Circular (%);_F : Proportion of foreign currency loans in the total loan amount prescribed in Appendix 1 of this Circular (%);_d,F + D_{Domestic air passenger transport service on regular basic economy class} : Proportion of foreign currency loans in the total loan amount prescribed in Appendix 1 of this Circular (%);_d,D

Where:

Domestic air passenger transport service on regular basic economy class_F: Proportion of domestic currency loans in the total loan amount prescribed in Appendix 1 of this Circular (%);

Domestic air passenger transport service on regular basic economy class_{Domestic air passenger transport service on regular basic economy class}: Foreign currency loan interest rate determined based on the foreign currency loan interest rate of power plant projects that have negotiated electricity prices in the five years immediately preceding the calculation of the electricity generation price range (%/year);

F_d,F: Domestic currency loan interest rate determined based on the domestic currency loan interest rate of power plant projects that have negotiated electricity prices in the five years immediately preceding the calculation of the electricity generation price range (%/year).

F_d,Db) Pre-tax return on equity r

(%) is determined by the following formula:_{Average loan repayment period is 10 years;} re,pt: Post-tax return on equity is 12%;

Where:

t: Corporate income tax rate averaged over the economic life of the Standard Power Plant determined according to current regulations of the State (%).

Annual average energy at the delivery point A

5.[10] (kWh) of the Standard Power Plant is determined by the following formula:_bq = P

A_bq x T_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.} x (1 - kcs)_max Tmax: number of hours operating at maximum capacity (hours);

Where:

Pt: Total refined capacity of the Standard Power Plant (kW);

: Average capacity reduction ratio calculated over the entire economic life of the power plant based on technical documentation from the equipment manufacturer, if undetermined, the average data of similar technology and installed capacity power plants may be used (%).

k_CSThe rate of capacity reduction shall be calculated on average for the entire economic life of the power plant based on the technical documentation of the equipment manufacturer; in cases where this cannot be determined, the average data of plants with similar technology types and installed capacity may be used (%).

Article 7. Method for establishing the fixed operation and maintenance price of the standard power plant

1. The fixed operation and maintenance price FOMC (VND/kWh) of the standard power plant is a component to recover major repair costs, labor costs, and other annual fixed operation and maintenance costs, determined according to the following formula:

Where:

TCFOM: Total fixed operation and maintenance cost of the standard power plant, determined according to Clause 2 of this Article (VND);

Abq: Average annual electricity generation at the delivery point of the standard power plant, determined according to Clause 5 of Article 6 of this Circular 4. Costs of purchasing transmission services, costs of purchasing distribution-retail electricity services, costs of purchasing system operation and dispatch services, costs of power plants providing system ancillary services, industry management and operation costs are determined based on costs plus regulated profit margins of the transmission, distribution-retail electricity, system operation and dispatch, and industry management and operation stages of the Vietnam Electricity Corporation according to levels of the electricity market as prescribed by the Ministry of Industry and Trade. Cost reductions are determined based on data from audited financial reports.

2. The total fixed operation and maintenance cost TC_FOM (VND) of the standard power plant is determined according to the following formula:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._FOM = SĐT x P_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.} x k

Where:

SĐT: Investment rate of the standard power plant determined according to the provision of Clause 3 of Article 6 of this Circular (VND/kW);

Pt: Total refined capacity of the Standard Power Plant (kW);

k: Fixed operation and maintenance cost ratio in the investment rate of the standard power plant specified in Appendix 1 of this Circular (%).

Article 8. Method for determining the variable price of the standard power plant for the year applying the pricing framework

The variable price of the standard power plant for the year applying the pricing framework (VC) is a component to recover fuel costs, other variable costs of the standard power plant with maximum operating hours, determined according to the following formula:

VC = HR x P_nlc x (1+f)

Where:

VC: Variable price of the standard power plant (VND/kWh);

HR: Calculated thermal efficiency at the specified load level in Appendix 1 of this Circular, expressed in kcal/kWh, kJ/kWh, or BTU/kWh;

f: Percentage of total startup costs, auxiliary fuel-material costs, and other variable costs for power generation compared to the main fuel cost, as specified in Appendix 1 of this Circular (%);

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_nlc: Main fuel price of the standard power plant (excluding VAT) expressed in VND/kcal, VND/kJ, or VND/BTU, determined as follows:

- For coal-fired power plants, the coal price includes losses, operational fees, management fees, insurance (if applicable), and does not include transportation costs. In cases where transportation costs cannot be determined from the fuel supply contract, the main fuel price is determined based on the fuel price in the main fuel purchase contract;

- For combined cycle gas turbine power plants using natural gas, the main fuel price is the gas price at the wellhead without considering transportation costs to the power plant;

- For combined cycle gas turbine power plants using LNG, the main fuel price includes the imported LNG price, import tax on LNG (if applicable), transportation costs of LNG to the regasification port warehouse, and does not include storage, regasification, and distribution costs after regasification (if applicable).

In cases where the power plant has not signed a fuel supply contract allowing the use of data from agreements between the investor and fuel suppliers or data calculated by consulting organizations.

Article 9. Method for determining the ceiling price of hydropower plants

The ceiling price of hydropower plants P^TĐ (VND/kWh) is determined according to the following formula:

Where:

ACTbq,j: Average avoided cost of the Northern, Central, and Southern regions according to the avoided cost tariff table published annually by the Electricity Regulatory Authority as stipulated in Circular No. 32/2014/TT-BCT dated October 9, 2014 of the Ministry of Industry and Trade on the procedures for establishing and implementing the avoided cost tariff table and issuing model power purchase contracts for small hydropower plants or replacement documents;

tj: Ratio of seasonal and hourly electricity production throughout the year as specified in Appendix 1 of this Circular (%).

Chapter III. PROCEDURES FOR BUILDING AND ISSUING THE POWER GENERATION PRICING FRAMEWORK

Article 10. Procedures for establishing and promulgating the electricity generation price framework

1. Within fifteen working days from the date the feasibility study report on investment construction of the power plant is approved, the investors of these power plants shall be responsible for providing the feasibility study report on investment construction to Vietnam Electricity Corporation.

2. Before November 1st each year, Vietnam Electricity Corporation shall be responsible for:

a) Based on the data in the approved feasibility study report on investment construction, the total investment amount effective at the time of calculating the electricity generation price framework received by Vietnam Electricity Corporation before October 15th each year or actual data from negotiating power purchase contracts (if any), Vietnam Electricity Corporation shall calculate or may hire consultants to calculate the electricity generation prices of thermal power plants according to the provisions of Article 5, Article 6, Article 7 and Article 8 of this Circular;

b) Propose the selection of benchmark power plants, select parameters used to calculate the electricity generation price for the benchmark power plant as stipulated in Appendix 1 of this Circular, consistent with the implementation of power purchase contracts and prepare the documentation for calculating the electricity generation price framework of power plants as prescribed in Article 11 of this Circularfor review by the Electricity Regulatory Authority;

c) Calculate the ceiling price of hydropower plants according to the method prescribed in Article 9 of this Circular.

3. Within five working days from the date of receiving the documentation for calculating the electricity generation price framework mentioned in point b, Clause 2 of this Article, the Electricity Regulatory Authority shall be responsible for checking the validity of the submitted documentation. If necessary, the Electricity Regulatory Authority may issue a letter requesting Vietnam Electricity Corporation to amend, supplement, or provide explanations clarifying the contents in the documentation. At the latest within fifteen working days from the date of receipt of the request for amendment, supplementation, or clarification of the contents in the documentation from the Electricity Regulatory Authority, Vietnam Electricity Corporation shall be responsible for submitting a report explaining the contents in the documentation as requested.

4. At the latest twenty working days from the date of receipt of valid documentation and the report explaining the contents in the documentation from Vietnam Electricity Corporation, the Electricity Regulatory Authority shall be responsible for selecting the benchmark power plant and organizing the review of the electricity generation price framework of power plants submitted by Vietnam Electricity Corporation.

5. At the latest fifteen working days from the date of organizing the review of the electricity generation price framework, the Electricity Regulatory Authority shall be responsible for completing the documentation to submit to the Minister of Industry and Trade for approval of the electricity generation price framework for the following year and publish it on the Electricity Regulatory Authority's electronic information website. In case the electricity generation price framework for the following year has not been published, it is permissible to temporarily apply the most recent effective electricity generation price framework.

Article 11. Documentation for Approval of Electricity Generation Prices of Power Plants to Establish the Electricity Generation Price Framework

The documentation for approval of electricity generation prices of power plants includes:

1.[13] The memorandum of Vietnam Electricity Corporation regarding the selection of parameters of the benchmark power plant and the calculation of the electricity generation price framework of power plants as stipulated in point b and point c, Clause 2, Article 10 of this Circular.

2. A table of parameters for calculating the electricity generation price for the aforementioned power plants according to the model prescribed in Appendix 2 of this Circular and the Excel file containing the calculation of the electricity generation price of these power plants.

3. Relevant documents related to the parameters used to calculate the electricity generation price of the aforementioned power plants.

Chapter IV. IMPLEMENTING PROVISIONS[14]

Article 12. Implementation Organization

1. The Electricity Regulatory Authority shall be responsible for reviewing the annual electricity generation price framework and submitting it to the Minister of Industry and Trade for approval.

2. Annually, based on the actual implementation of power purchase contracts or opinions of power generation units, Vietnam Electricity Corporation, if necessary, the Electricity Regulatory Authority shall reconstruct the table of parameters used to calculate the electricity generation price for the benchmark power plant as stipulated in Appendix 1 of this Circular, and submit it to the Minister of Industry and Trade for issuance before October 1st each year.

Article 13. Effective Date

1. This Circular takes effect from the date 03 the 02 2015.

2. This Circular abolishes the provisions in Articles 3, 4, 5, 6, 7, 17, 18, Clause 1, Article 24, Clause 1, Article 25 of Circular No. 41/2010/TT-BCT dated December 14, 2010 issued by the Minister of Industry and Trade on the method for determining electricity generation prices; procedures and formalities for establishing and promulgating the electricity generation price framework and approving power purchase contracts.

3. During the implementation process, if there are any difficulties, relevant units should directly reflect them to the Electricity Regulatory Authority for consideration and resolution within their authority or report to the Ministry of Industry and Trade for resolution./.

ANNEX 1

PARAMETERS USED IN CALCULATING THE ELECTRICITY GENERATION PRICE OF THE BENCHMARK POWER PLANT AND THE CEILING PRICE OF HYDROPOWER PLANTS
(Annexed to Circular No. 57/2014/TT-BCT dated December 19, 2014 issued by the Minister of Industry and Trade)

I. Parameters Used in Calculating the Electricity Generation Price of the Benchmark Power Plant

II. Parameters Used in Calculating the Ceiling Price of Hydropower Plants

The proportion of seasonal and hourly electricity production during the year (%) is defined as follows:

The number of peak, normal, and off-peak hours is stipulated in Circular No. 16/2014/TT-BCT dated May 29, 2014 issued by the Ministry of Industry and Trade on implementing electricity sales prices or other replacement documents.

ANNEX 2

TABLE OF KEY PARAMETERS OF THE BENCHMARK POWER PLANT
(Annexed to Circular No. 57/2014/TT-BCT dated December 19, 2014 issued by the Minister of Industry and Trade)