Circular No. 06/2016/TT-BCT dated June 14, 2016 on amending a Circular No. 32/2014/TT-BCT dated October 9, 2014 of the minister of industry and trade on procedures for establishment and application of avoidable cost schedule and promulgation of model Power Purchase Agreement (PPA) to small hydropower plants

THE MINISTRY OF INDUSTRY AND TRADE

Circular No. 06/2016/TT-BCT dated June 14, 2016 on amending a Circular No. 32/2014/TT-BCT dated October 9, 2014 of the minister of industry and trade on procedures for establishment and application of avoidable cost schedule and promulgation of model Power Purchase Agreement (PPA) to small hydropower plants

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

Pursuant to the Law on Electricity dated December 3, 2004; Law on amendments to the Law on Electricity dated November 20, 2012;

At the request of General Director of Electricity Regulatory Authority,

The Ministry of Industry and Trade promulgates a Circular on amendments to Circular No. 32/2014/TT-BCT dated October 9, 2014 of the Minister of Industry and Trade on procedures for establishment and application of avoidable cost schedule and promulgation of model Power Purchase Agreement (PPA) to small hydropower plants as follows:

Article 1. To amendArticle 7 as follows:

 “Article 7. Conditions for application of avoidable cost schedule satisfied by the Seller

The Seller is entitled to apply the avoidable cost schedule if it satisfies one of the following conditions:

1. Installed capacity of plants is no more than 30 MW and total electrical power is produced from renewable energy.

2. If the Seller has multiple cascade hydropower plants on the same river and total installed capacity of those plants is no more than 60 MW, the procedures below shall be followed:

a) In case where a group of cascade hydropower plants consists of multiple hydropower plants with capacity of no more than 30 MW which are put into operation for the first time, all hydropower plants in such group will apply the avoidable cost schedule as prescribed in this Circular;

b) In case where a group of cascade hydropower plants consists of multiple hydropower plants with capacity of more than 30 MW which are put into operation for the first time, the investor shall:

- Determine and negotiate electricity costs, and conclude PPA as prescribed in Circular No. 56/2014/TT-BCT dated December 19, 2014 of the Ministry of Industry and Trade on method of determination of electricity generation costs, procedures for inspection of PPA (hereinafter referred to as Circular No. 56/2014/TT-BCT); and participate in electricity market in accordance with regulations on electricity market promulgated by the Ministry of Industry and Trade;

- When the following hydropower plant is put into commercial operation, the investor may decide to apply one of the following regulations:

+ Keep determining and negotiating electricity costs and conclude PPA as prescribed in Circular No. 56/2014/TT-BCT; and participate in electricity market in accordance with regulations on electricity market promulgated by the Ministry of Industry and Trade;

+ Applying avoidable cost schedule for all hydropower plants in the group of cascade hydropower plant from the date on which the following hydropower plant is put into commercial operation as prescribed in this Circular.”

Article 2. To amendClause 2 Article 3 Appendix IV – Model Power purchase agreement (PPA) applying avoidable cost schedule:

 “2.Connection

a) For power plants with capacity of at least 10 MW

The Seller shall invest and provide SCADA system, system of data measurement and transmission in terms of electricity system dispatching;

b) For power plants with capacity of from 3 MW to less than 10MW

The Seller shall invest and provide system of data measurement and transmission to transmit operating data to the regional electricity system dispatching center,

c) The Seller shall invest, construct, operate and maintain the connection facilities to connect the power plant to distribution electrical grid and SCADA system in accordance with regulations on distribution grids and other relevant provisions. The Seller shall incur expenses for upgrading measurement system at electrical substation to measure effective and reactive power in two directions on distribution lines connected to power plants as prescribed in Annex C under this Contract;

d) The Buyer is entitled to consider design and examine the sufficiency of protective equipment. The Buyer shall notify the Seller of assessment results in writing within 30 days from the day on which all technical documentation relating to design is received. The Buyer shall notify the Seller of all detected design errors in writing. The Seller shall implement amendments proposed by the Buyer in accordance with regulations on distribution grids, transmission grids according to voltage class connected to the plant;

e) The Buyer shall allow the Seller’s power plant to be connected to the Buyer’s grids after the Seller has completed all requirements for amendments proposed by the Buyer and cooperate with the Seller in completing trial operation and commissioning of the power plant.”

Article 3. Effect

1. This Circular takes effect on July 29, 2016.

2. Transitional provisions on groups of cascade hydropower plants having hydropower plants of more than 30 MW which are put into operation for the first time

a) With regard to the groups of cascade hydropower plants having PPA concluded according to the avoidable cost schedule promulgated before the effective date of this Circular, such avoidable cost schedule shall be kept applying as prescribed in Circular No. 32/2014/TT-BCT until December 31, 2016;

b) Until December 31, 2016, if the investors of power plant fails to put the following hydropower plant of under 30 MW in the groups of cascade hydropower plants into commercial operation, the procedures below shall be followed:

- For hydropower plants in the group of cascade hydropower plants of no more than 30 MW: Apply avoidable cost schedule prescribed in Circular No. 32/2014/TT-BCT;

- For hydropower plants in the group of cascade hydropower plants of more than 30 MW: + Keep determining and negotiating electricity costs and concluding PPA as prescribed in Circular No. 56/2014/TT-BCT; and participating in electricity market in accordance with regulations on electricity market promulgated by the Ministry of Industry and Trade. Until December 31, 2016, any investor failing to negotiate the electricity costs and PPA as prescribed in Circular No. 56/2014/TT-BCT, such power plant may not generate electricity on the grid and receive payment of electricity costs;

c) After the following hydropower plant in a group of cascade hydropower plants is put into commercial operation, the investor may decide to apply Article 1 of this Circular.

3. Difficulties that arise during the implementation of this Circular should be reported to Electricity Regulatory Authority for consideration and Electricity Regulatory Authority shall request The Ministry of Industry and Trade for appropriate amendments./.

For the Minister

The Deputy Minister

Hoang Quoc Vuong