Circular No. 31/2011/TT-BCT on Adjusting Electricity Sales Prices Based on Basic Input Parameters

CIRCULAR

Article 24Article regulating the adjustment of electricity sales prices based on basic input parameters

_____________________

Pursuant to Decree No. 189/2007/NĐ-CP dated December 27, 2007 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade; Decree No. 44/2011/NĐ-CP dated June 14, 2011 of the Government amending and supplementing Clause 3 of Decree No. 189/2007/NĐ-CP dated December 27, 2007 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Electricity Law dated December 3, 2004;

Pursuant to Decree No. 105/2005/NĐ-CP dated August 17, 2005 of the Government detailing and guiding the implementation of certain provisions of the Electricity Law;

Pursuant to Decision No. 24/2011/QĐ-TTg dated April 15, 2011 of the Prime Minister on adjusting electricity sales prices according to market mechanisms;

The Ministry of Industry and Trade stipulates the adjustment of electricity sales prices based on basic input parameters as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of regulation and applicable subjects

1. This Circular guides the implementation of the adjustment of electricity sales prices based on basic input parameters as prescribed in Decision No. 24/2011/QĐ-TTg dated April 15, 2011 of the Prime Minister on adjusting electricity sales prices according to market mechanisms.

2. This Circular applies to units implementing the adjustment of electricity sales prices based on basic input parameters and units providing fuel price parameters for the adjustment of electricity sales prices.

Article 2. Interpretation of Terms

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

1. Unaccounted production and business costs of electricity are reasonable and valid production and business costs of electricity actually incurred from previous years that have not been included in the current average electricity sales price. Average electricity sales price

2. Supervising organizations practicing notarizationis the average electricity sales price calculated by Vietnam Electricity Group based on fluctuations of basic input parameters, in accordance with the method prescribed in Clause 1, Article 4 of this Circular. 3. Electricity commercial volume

is the total electricity volume sold by Vietnam Electricity Group to end-users and retail electricity suppliers. MECHANISM FOR ADJUSTING ELECTRICITY SALES PRICES

Chapter II

Principles for determining basic input parameters

Article 3. Electricity sales prices are recalculated and reviewed monthly based on fluctuations of basic input parameters compared to those used to determine the current electricity sales price according to the following principles:

The exchange rate for calculation is the average US dollar exchange rate from the day of the last electricity price adjustment to the 15th of the month being calculated (or the preceding working day if the 15th falls on a weekend or public holiday), obtained from the closing US dollar selling rate of the head office of Vietcombank.

1. The fuel price for calculation is the average daily fuel price from the day of the last electricity price adjustment to the 15th of the month being calculated (or the preceding working day if the 15th falls on a weekend or public holiday), where the coal price is taken from the domestic coal price for power generation at the delivery point announced by Vietnam National Coal-Mineral Industries Group; the gas price for Ca Mau Power Plant is calculated based on international oil prices by Vietnam Gas Corporation; the gas price from other sources (Nam Con Son and Cuu Long) is determined by the Prime Minister according to the contract price at the time of calculating electricity sales prices; the diesel price is determined based on the retail diesel price in the domestic market announced by Vietnam Oil Trading Corporation.

2. The structure of electricity generation volumes of past months since the last adjustment is forecasted and calculated.

Procedure for adjusting electricity sales prices

Article 4. 1. The average electricity sales price for calculation is recalculated and reviewed when basic input parameters fluctuate compared to those used in calculating the current average electricity sales price according to the following formulas:

G: Average electricity sales price for calculation;

Where:

HH

of^{: Current average electricity sales price;}ΔG : Generation price difference due to changes in actual electricity generation volume compared to planned generation volume approved;

ΔG

: Generation price difference due to changes in the US dollar exchange rate compared to the exchange rate used in calculating the current average electricity sales price;_TG: Generation price difference due to changes in fuel prices compared to the fuel prices used in calculating the current average electricity sales price;

: Generation price difference due to changes in the US dollar exchange rate compared to the exchange rate used in calculating the current average electricity sales price;_GTΔG: Average electricity sales price difference due to changes in basic input parameters;

: Price component calculated from unaccounted production and business costs of electricity

not yet fully included in the ; current

of_sales price determined according to the regulations of the competent authority and Clause 4 of this Article; LBO;

: Component of the electricity sales price extracted from the electricity sales price allocated to the Electricity Price Stabilization Fund (+) or extracted from the Fund to stabilize the electricity sales price (-) according to

the guidance of

2. the Ministry of Finance - Industry and Trade based on ΔG : Full average electricity sales price difference; The method for checking and calculating the adjustment of electricity sales prices based on basic input parameters is prescribed in the Appendix attached to this Circular.Before the 20th of each month, based on the actual basic input parameters determined according to Article 3 of this Circular, Vietnam Electricity Group (: Generation price difference due to changes in the US dollar exchange rate compared to the exchange rate used in calculating the current average electricity sales price;).

checks, calculates the average electricity sales price difference due to changes in basic input parameters ( 3. In case the average electricity sales price difference due to changes in basic input parameters

is equal to or greater than 5% of the current average electricity sales price

Vietnam Chemical Corporation Group , the average electricity sales price will be adjusted as follows:a) Adjust the average electricity sales price by 5% report to the Ministry of Industry and Trade for approval of the electricity price adjustment plan. If the Ministry of Industry and Trade does not provide comments within five working days from the date of receipt of the electricity price adjustment calculation report, Vietnam Electricity Group may adjust increase the actual shortest distance of each position receiving the allocation. the electricity sales price the actual shortest distance of each position receiving the allocation. by 5% compared to the current electricity sales price;

b) Adjustment increase the actual shortest distance of each position receiving the allocation. increase over 5%

Vietnam Electricity Group reports to the Ministry of Industry and Trade and the Ministry of Finance land pricing scheme ; for review. Within ten working days from the date of receipt of the electricity price adjustment report from Vietnam Electricity Group, the Ministry of Industry and Trade and the Ministry of Finance organize a review for the Ministry of Industry and Trade to submit to the Prime Minister for consideration and approval.

In case the Prime Minister has not provided a response, within fifteen working days from the date the Ministry of Industry and Trade submits the electricity price adjustment plan, Vietnam Electricity Group may adjust the average electricity sales price by 5%.

4. In case the difference between the average electricity selling price due to fluctuations in basic input parameters is less than 5% compared to the current electricity selling price (ΔG <5%G^{: Current average electricity sales price;}), the Vietnam Electricity Corporation shall calculate and allocate into the average electricity selling price the production and business costs of electricity that have not been fully accounted for in the electricity selling price to adjust the average electricity selling price by a maximum increase of 5% and implement the adjustment of the electricity selling price in accordance with point a, Clause 3 of this Article.

In case it is necessary to adjust the average electricity selling price by more than 5%, the Vietnam Electricity Corporation shall implement the adjustment of the electricity selling price in accordance with point b, Clause 3 of this Article.

5. The electricity price stabilization fund shall be established when ΔG <0 and the production and business costs of electricity that have not been included in the electricity selling price have been fully allocated.

The Vietnam Electricity Corporation shall implement the establishment, management, and use of the electricity price stabilization fund in accordance with the guidance of the Ministry of Finance - Industry and Trade.

In case, after establishing the electricity price stabilization fund according to regulations, the full average electricity selling price difference ΔG ≤ -5%G^{: Current average electricity sales price;} , the Vietnam Electricity Corporation shall adjust the average electricity selling price down to the calculated average electricity selling price, while reporting to the Ministry of Industry and Trade and the Ministry of Finance for supervision.

6. After adjusting the average electricity selling price, the Vietnam Electricity Corporation shall be responsible for determining the detailed electricity selling price schedule for each group of customers based on the adjusted average electricity selling price and the current retail electricity tariff structure.

Article 5. Adjusting the retail electricity price of retail electricity units purchasing electricity from the national grid combined with local power generation to sell electricity

The retail electricity prices for groups of customers using electricity of retail electricity units purchasing electricity from the national grid combined with local power generation to sell electricity shall be adjusted accordingly with the level of adjustment of the average electricity selling price.

Article 6. Documents for adjusting the electricity selling price based on basic input parameters

Documents for adjusting the electricity selling price based on basic input parameters include the following main contents:

1. Report on the plan for adjusting the electricity selling price.

2. Basic input parameters to determine the calculated average electricity selling price.

3. Table calculating the components of the power generation price difference due to fluctuations in basic input parameters.

4. Explanation of the plan for adjusting the electricity selling price, evaluation of the fluctuation of power generation costs, analysis of the impact of the new electricity price on each group of electricity users.

5. Production and business costs of electricity that have not been fully accounted for in the electricity selling price and the remaining balance.

6. Report on the establishment and use of the electricity price stabilization fund.

Chapter III

IMPLEMENTATION

Article 7. Implementation Organization

1. The Electricity Regulatory Authority shall be responsible for:

a) Take the lead and coordinate with the Ministry of Finance (Price Management Department) to review or assess the plan for adjusting the electricity selling price in accordance with regulations;

b) Inspect and supervise the implementation of the electricity selling price adjustment;

c) Guide the Vietnam Electricity Corporation to develop annual power production plans and economic-technical indicators; review and submit to the Ministry of Industry and Trade for approval the annual power production plans and economic-technical indicators of the Vietnam Electricity Corporation;

d) Guide the contents of inspection, specify the contents that must be audited in the production and business costs of electricity of the Vietnam Electricity Corporation;

đ) Publicly announce the annual production and business costs of electricity;

e) Resolve issues related to the construction and adjustment of the electricity selling price.

a) Compiling the list of power plants providing ancillary services according to the transmission system regulations and the national black start and system recovery regulations issued by the Ministry of Industry and Trade;

a) Implement the adjustment of the detailed electricity selling price schedule for each group of customers when adjusting the average electricity selling price in accordance with this Circular;

b) Before the 25th day of each month, report to the Electricity Regulatory Authority the operation plan for the next month as the basis for inspecting and supervising the adjustment of the electricity selling price; panalyze the difference between the actual monthly power generation structure and the planned monthly power generation structure;

c) Before November 15 of each year, submit to the Ministry of Industry and Trade for approval the power production plan and economic-technical indicators for the following year;

d) Before June 1 of each year, report to the Ministry of Industry and Trade and the Ministry of Finance the audited financial results of electricity production and business operations, production and business costs at each stage, and electricity selling prices for the fiscal year;

đ) Report to the Ministry of Industry and Trade and the Ministry of Finance the results of checking and calculating the adjusted average electricity selling price in accordance with this Circular;

e) Adjust the annual power production plan and submit to the Ministry of Industry and Trade for approval when there is a significant change in load demand, power source structure, or hydrological conditions;

g) Announce the main contents of the plan for adjusting the electricity price immediately after adjusting the electricity selling price in accordance with this Circular;

h) Supplement the power purchase and sale contracts of power generation units with the content of adjusting the power purchase and sale prices according to the fluctuations in the main fuel prices for power generation for contracts without such adjustment content before implementing the electricity selling price adjustment.

3. The Vietnam National Coal-Mineral Industries Group, the Vietnam Gas Corporation, and the Vietnam Oil Corporation shall be responsible for sending written notifications to the Vietnam Electricity Corporation when changes occur in coal prices, gas prices, and oil prices.

Article 8. Effective Date

1. This Circular takes effect from the date September 1, 2011.

2. During the implementation process, if any difficulties arise, relevant units shall have the responsibility to reflect them to the Ministry of Industry and Trade for supplementation and amendment to make them appropriate./.