Circular No. 57/2014/TT-BCT stipulates the method and procedure for constructing and promulgating annual electricity generation price frameworks.

 

CIRCULAR

REGULATIONS ON METHODS AND PROCEDURES FOR BUILDING AND ISSUING THE FRAMEWORK OF ELECTRICITY GENERATION PRICES

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;

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

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.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Circular stipulates the methods and procedures for building and issuing the annual framework of electricity generation prices.

2. This Circular applies to the following entities:

a) Electricity generating units owning power plants connected to the national power grid with total installed capacity exceeding 30MW, power plants with installed capacity from 30MW downwards 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, power plants using new renewable energy sources (wind, geothermal, tidal, 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. Reference power plant is a thermal power plant with the typical capacity of units determined in the National Power Development Plan representing a type of thermal power plant with the same power generation technology, configuration, fuel type, and used to calculate the framework of electricity generation prices 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. Approved total investment amount of the project is the total investment amount accompanied by the initial basic design approved by the competent authority according to Decree No. 12/2009/ND-CP dated February 12, 2009 of the Government on project investment management or other replacement documents.

5. Capital investment settled is the entire legitimate cost incurred during the investment process to put the project into operation and use, settled and audited in accordance with the relevant regulations of the State. Legitimate costs are those carried out within the scope of the approved design and budget estimates, including adjustments and supplements, consistent with signed contracts, and in compliance with legal provisions. The settled capital investment must be within the limit of the approved total investment amount (or adjusted total investment amount) as decided by the competent authority approving it.

Chapter II

METHOD FOR ESTABLISHING THE ELECTRICITY GENERATION PRICE FRAMEWORK

Article 3. Principles for Establishing the Electricity Generation Price Range

1. The framework of electricity generation prices is a range of values from 0 (not applicable) to the ceiling price of each type of thermal power plant and hydropower plant constructed and issued annually.

2. For thermal power plants: the ceiling price is the electricity generation price of the standard power plant for various types of technologies and capacities specified in Article 4 This Circular, the method for determining the electricity generation price of the standard power plant is prescribed in Articles 5, 6, 7, and 8 of this Circular.

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

Article 4. Standard Power Plants

Standard power plants are defined for each type of technology and equipment according to the following capacity ranges in the table below:

Article 5. Method for determining the power generation price (VND/kWh) of the standard power plant

The electricity generation price P^CP (VND/kWh) The power generation price of the standard power plant is determined according to 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 pricing framework of the standard power plant is determined according to the method prescribed in Article 8 of this Circular (VND/kWh).

The power generation price of the standard power plant does not include the fuel transportation cost.

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 according to the following formula:

Where:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._VĐT: Investment capital cost for constructing the standard power plant (excluding VAT) converted evenly each year as specified in Clause 2 of this Article (VND);

A_bp: Annual average electricity at the delivery point as stipulated in Clause 5 of this Article (kWh).

2. The annual even conversion of the investment capital cost of the standard power plant TC_VĐT (VND) is calculated according to 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);

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}: 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. The unit investment cost (SĐT) is the investment cost for 01 (and Law No. 47/2024/QH15) kW of the average refined capacity of the standard power plant calculated based on the approved total project investment amount send a text message The settled investment capital includes component costs such as:

a) Construction costs including construction costs for buildings and sub-projects; demolition and dismantling of old architectural materials; land leveling for construction; temporary construction works; auxiliary works serving construction; temporary houses at the site for living and construction management;

b) Equipment costs including procurement costs for technological equipment, training for plant operation; installation, testing, calibration; transportation, insurance, taxes, and other related fees;

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

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

d) Construction consulting costs including costs for survey, design, construction supervision, review consultation, and other construction investment consulting 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;

g) Contingency costs including costs for unexpected work volumes and inflation factors during the construction period.

4. The financial discount rate i (%) applied to the weighted average cost of capital before tax is determined according to the following formula:

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) The loan interest rate rd (%) is calculated as the weighted average interest rate of domestic and foreign currency loans according to the following formula:

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: The foreign currency loan interest rate is determined as the average value of the US Dollar LIBOR swap rate for a ten-year term over the last 36 months of the year of the pricing framework construction on the London interbank market (LIBOR swaps[1]) plus the average annual service fee rate of banks, guarantee fees, and related taxes at 3% or as issued by the Ministry of Industry and Trade in the calculation of the power generation pricing framework (%/year);

F_d,D: The domestic currency loan interest rate is determined as the average of the interest rate on 12-month post-payment deposits in Vietnamese Dong for individual customers of the five years immediately preceding the year of the pricing framework construction, determined on September 30 each year, of four commercial banks (Vietnam Joint Stock Commercial Bank for Foreign Trade, Vietnam Joint Stock Commercial Bank for Industry and Trade, Vietnam Joint Stock Commercial Bank for Investment and Development, Vietnam Agricultural and Rural Development Bank or their legitimate successors) plus the average annual bank service fee rate of 3.5% or as issued by the Ministry of Industry and Trade in the calculation of the power generation pricing framework (%/year).

b) The pre-tax return on equity r_{Average loan repayment period is 10 years;} re,pt: Post-tax return on equity is 12%;

Where:

F_e,pt: The post-tax return on equity is 12%;

t: TThe average corporate income tax rate throughout the economic life of the standard power plant is determined according to current state regulations (%).

5. 3. Amend Clause 3 Article 2 as follows:Average annual electricity at the delivery point A_bq (kWh) The power generation price of the standard power plant is determined according to the following formula:

A_bq x T_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.} x (1 - kcs)_max

Where:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}: Total refined capacity of the standard power plant (kW);

T_max: Hours of maximum capacity operation (hours).

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

1. The fixed operation and maintenance price FOMC of the standard power plant is a component to recover large repair costs, labor costs, and other annual fixed operation and maintenance costs, determined according to the following formula: (VND/kWh) : Total fixed operation and maintenance costs of the standard power plant, as specified in Clause this Article (VND);

Where:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._FOM: Annual average electricity output at the delivery point of the standard power plant, as specified in Clause 5 of Article 6 of this Circular (kWh). Total fixed operation and maintenance costs and SFC: Investment cost of the standard power plant, as specified in Clause 6 of this Circular (VND/kW); 2 Article 8. Method for determining the variable price of the standard power plant for the year of applying the pricing framework

A_bqThe variable price of the standard power plant for the year of applying the pricing framework (VC) is a component to recover fuel costs, and other variable costs of the standard power plant with maximum capacity operating hours, determined according to the following formula:(1+f) HR: Calculated specific fuel consumption at the load level specified in Appendix 1 of this Circular, expressed in kg/kWh or BTU/kWh;

2. f: Percentage ratio of total start-up costs, fuel-material auxiliary costs, and other variable costs for power generation compared to main fuel costs, as specified in Appendix 1 of this Circular (%);Price of main fuel of the standard power plant excluding transportation fees; for coal-fired power plants, it includes losses, management fees, and insurance (if applicable); if the fuel supply contract does not separate transportation costs, the main fuel price is determined based on the purchase contract price; P and is expressed in VND/kg or VND/BTU. TC_FOM (VND) The power generation price of the standard power plant is determined according to the following formula:

TC_FOM = SĐT x P_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.} x k

Where:

Article 9. Method for determining the ceiling price of hydropower plantsCeiling price of hydropower plants P 3 Article ACT bq,j

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}: 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 (%).

Average avoidable cost of the Northern, Central, and Southern regions according to the avoidable cost tariff schedule published annually by the Electricity Regulator Agency as stipulated in Circular No.

1. 32/2014/TT-BCT

VC = HR x P_nlc x of the Ministry of Industry and Trade regarding the procedures for establishing and applying the Avoidable Cost Tariff Schedule and issuing model Power Purchase Agreements for small hydropower plants

Where:

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

or any replacement documents

: Seasonal and hourly electricity production ratio throughout the year, 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: ofArticle 10. Procedures for establishing and promulgating the power generation pricing framework Before November 1st each year, Vietnam Electricity Corporation shall be responsible for:_nlc Based on actual data from power purchase and sale contract negotiations and provisions in Articles 5, 6, 7, and 8 of this Circular, calculate the power generation prices for thermal power plants with capacity over 200 MW expected to operate in the upcoming year

or

currently negotiating power purchase and sale contracts with^TĐ (VND/kWh) are determined according to the following formula:

Where:

Prepare the documentation for calculating the power generation prices of the aforementioned power plants as specified in Article 11 of this Circular, and submit it to the Electricity Regulator Agency for review._{Within five working days from the date of receiving the documentation for calculating the power generation prices of the aforementioned power plants as specified in point a, Clause 1 of this Article, the Electricity Regulator Agency shall be responsible for checking the validity of the submitted documentation. If necessary, the Electricity Regulator Agency may issue a document requesting Vietnam Electricity Corporation to supplement, amend, or clarify the contents in the documentation.}: At the latest twenty working days from the date of receiving valid documentation, the Electricity Regulator Agency shall be responsible for: Organizing the review of power generation prices of the dated 09 the 10 year 2014 power plants submitted by Vietnam Electricity Corporation Selecting;

organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular._{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}the standard power plant, the selected plant's precise capacity is rounded to the nearest capacity level as specified in Article 4 of this Circular The Electricity Regulator Agency shall be responsible for calculating the ceiling price of hydropower plants according to the method specified in Article 9 of this Circular. (%).

Chapter III

PROCEDURES FOR BUILDING AND ISSUING THE POWER GENERATION PRICING FRAMEWORK

Before December 31st each year, the Electricity Regulator Agency shall be responsible for submitting the power generation pricing framework for the next year to the Minister of Industry and Trade for approval and publication on the Electricity Regulator Agency’s website. In case the power generation pricing framework for the next year has not been published, the previous year's framework may temporarily be applied.

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

a) Based on actual negotiation data of electricity purchase and sale contracts and the provisions of Articles 5, 6, 7, and 8 of this Circular, calculate the power generation prices for thermal power plants with capacity over 200 MW that are expected to operate in the coming year or currently negotiating electricity purchase and sale contracts with Vietnam Electricity Corporation;

b) Prepare a calculation dossier for the power generation price the of the aforementioned power plant according to the provisions of Article 11 of this Circular, submit it to the Electricity Regulatory Authority for review.y Within five working days from the date of receipt of the power generation price calculation dossier of the aforementioned power plants under point a, Clause 1 of this Article, the Electricity Regulatory Authority shall be responsible for checking the validity of the submitted dossier. If necessary, the Electricity Regulatory Authority may issue a document requesting Vietnam Electricity Corporation to supplement, amend, or clarify the contents in the dossier.

2. At the latest twenty working days from the date of receiving a valid dossier, the Electricity Regulatory Authority shall be responsible for:

3. Organizing the review of the power generation price

a) of the power plants submitted by Vietnam Electricity Corporation;electricity generation units by Vietnam Electricity Corporation Selecting

b) a benchmark power plant, the precise capacity of the selected plant will be converted to the nearest capacity level as prescribed in Article 4 of this Circular the The Electricity Regulatory Authority shall be responsible for calculating the ceiling price of hydropower plants according to the method stipulated in Article 9 of this Circular..

4. Before December 31st each year, the Electricity Regulatory Authority shall be responsible for submitting to the Minister of Industry and Trade for approval the framework of power generation prices for the following year and publish it on the Electricity Regulatory Authority's electronic information website. In case the framework of power generation prices for the following year has not been published, it is permissible to temporarily apply the framework of power generation prices of the immediately preceding year.

5. IBOR

Article 11. Documents for requesting approval of power generation prices for power plants to establish the power generation price framework

The documents for requesting approval of power generation prices for power plants include:

1. The proposal and calculation by Vietnam Electricity Group on the power generation prices for the power plants mentioned in point a, Clause 1, Article 10 of this Circular.

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

3. Relevant documents related to the parameters used in calculating the power generation prices for the aforementioned power plants.

Chapter IV 

IMPLEMENTING PROVISIONS

Article 12. Implementation Organization

1. The Power Regulation Agency is responsible for reviewing the annual power generation price framework and submitting it to the Minister of Industry and Trade for approval.

2. Annually, based on the actual implementation of electricity purchase and sale contracts or opinions from power generation units, Vietnam Electricity Group, when necessary, the Power Regulation Agency will re-establish the table of parameters used to calculate the power generation price for the standard power plant specified in Appendix 1 of this Circular, and submit it to the Minister of Industry and Trade for consideration and 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 at Articles 3, 4, 5, 6, 7, 17, 18, Clause 1, Article 24, and Clause 1, Article 25 of Circular No. 41/2010/TT-BCT dated December 14, 2010 issued by the Minister of Industry and Trade regarding the method for determining power generation prices; procedures and formalities for establishing, issuing the power generation price framework, and approving electricity purchase and sale contracts. In the course of implementation, if there are any difficulties, relevant units are requested to directly reflect them to the Power Regulation Agency for examination and resolution within their authority or report to the Ministry of Industry and Trade for resolution./.

3. - State Oil and Gas Corporation; - Vietnam National Coal-Mineral Industries Group;

 

 

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:

primary fuel price

 

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)