Circular No. 31/2011/TT-BCT dated August 19, 2011 of the Ministry of Industry and Trade providing for the adjustment of electricity sale prices according to basic input parameters

THE MINISTRY OF INDUSTRY AND TRADE

Circular No. 31/2011/TT-BCT of August 19, 2011, providing for the adjustment of electricity sale prices according to basic input parameters

Pursuant to the Government’s Decree No. 189/2007/ND-CP of December 27, 2007, defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade, and Decree No. 44/2011/ND-CP of June 14, 2011, amending and supplementing Article 3 of Decree No. 189/2007/ND-CP of December 27, 2007;

Pursuant to the December 3, 2004 Electricity Law;

Pursuant to the Government’s Decree No. 105/2005/ND-CP of August 17, 2005, detailing and guiding a number of articles of the Electricity Law;

Pursuant to the Prime Minister’s Decision No. 24/2011/QD-TTg of April 15, 2011, on the adjustment of electricity sale prices under the market mechanism;

The Ministry of Industry and Trade provides for the adjustment of electricity sale prices according to basic input parameters as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. This Circular guides the adjustment of electricity sale prices according to basic input parameters prescribed in the Prime Minister’s Decision No. 24/2011/QD-TTg of April 15, 2011, on the adjustment of electricity sale prices under the market mechanism.

2. This Circular applies to units which adjust electricity sale prices according to basic input parameters and units which supply fuel price parameters for the adjustment of electricity sale prices.

Article 2. Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Electricity production and business costs not yet fully accounted into the electricity sale price are reasonable and regular electricity production and business expenses arising in previous years not yet accounted into the current average electricity sale price.

2. Computed average electricity sale price is the average electricity sale price computed and examined by Electricity of Vietnam according to fluctuations of basic input parameters by the method prescribed in Clause 1, Article 4 of this Circular.

3. Commercial electricity output is the total electricity output sold by Electricity of Vietnam to end-users and electricity-retailing units.

Chapter II

ELECTRICITY SALE PRICE ADJUSTMENT MECHANISM

Article 3. Principles of determination of basic input parameters

The electricity sale price shall be computed and examined every month, taking into account fluctuations of basic input parameters against those used for determining the current electricity sale price, according to the following principles:

1. The computing exchange rate is the USD exchange rate calculated on an average daily basis from the date of the last electricity sale price adjustment to the 15th day of the computing month (or the preceeding working day if the 15th day falls on a week-end or holiday), which is the USD selling rate at the closing hour of the headquarters of the Joint-Stock Bank for Foreign Trade of Vietnam.

2. The computing fuel price is the daily average fuel price calculated from the date of the last electricity sale price adjustment to the 15th day of the computing month (or the preceeding working day if the 15th day falls on a week-end or holiday), with the coal price being the domestic coal price for electricity generation at the location of coal delivery publicized by Vietnam National Coal, Mineral Industries Holding Corporation Limited; the gas price for the Ca Mau power plant calculated by PetroVietnam Gas Corporation according to international oil prices; the prices of gas from other sources (Nam Con Son and Cuu Long) prescribed by the Prime Minister at the time of computing electricity sale prices under contracts; and the oil price determined according to the oil retail prices in the domestic market, publicized by Vietnam National Petroleum Corporation.

3. The generated electricity output structure of previous months counting from the last adjustment with the total output from the 15th day to the end of the month projected for computing.

Article 4. Sequence of electricity sale price adjustment

1. The average electricity sale price shall be computed and examined when basic input parameters fluctuate as compared to those used for computing the current electricity sale price according to the following formulas:

G = GHH + G + G CTH ± GBO

G = GSL+ GTG + GNL

GTP = G + GCTH ± GBO

Of which:

G: The computed average electricity sale price;

GHH: The current average electricity sale price;

GSL: The generated-electricity price difference due to fluctuation of the generated electricity output compared to the planned electricity output already approved;

GTG: The generated-electricity price difference due to fluctuation of the USD exchange rate compared to the exchange rate used for computing the current average electricity sale price;

GNL: The generated-electricity price difference due to fluctuation of the fuel price compared to the fuel price used for computing the current average electricity sale price;

G: The average electricity sale price difference due to fluctuation of basic input parameters;

GCTH: The price components calculated from the electricity production and business costs not yet fully accounted into the current electricity sale price, which are determined under regulations of competent bodies and Clause 4 of this Article;

GBO: The electricity sale price components subtracted from the electricity sale price and put into the electricity price valorization fund (+) or subtracted from the electricity price valorization fund (-) under the joint guidance of the Ministry of Finance and the Ministry of Industry and Trade;

GTP: The complete average electricity sale price difference.

The methods of examining and computing the electricity sale price adjustment according to basic input parameters are prescribed in the appendix to this Circular (not printed herein).

2. Before the 20th day every month, based on the real basic input parameters determined under Article 3 of this Circular, Electricity of Vietnam shall examine and calculate the average electricity sale price difference due to fluctuation of basic input parameters (G).

3. If the average electricity sale price difference due to fluctuation of basic input parameters is equal to, or higher than 5% as compared to the current electricity sale price (G e”5% GHH), the average electricity sale price shall be adjusted as follows:

a/ To adjust the average electricity sale price at the level of 5%

Electricity of Vietnam shall report the electricity sale price adjustment plan to the Ministry of Industry and Trade for approval. If the latter gives no comments, after 5 days from the date of receiving the electricity price adjustment computing dossier, Electricity of Vietnam may increase the average electricity sale price 5% over the current electricity sale price;

b/ To adjust the average electricity sale price with an increase of over 5%

Electricity of Vietnam shall report the electricity price plan to the Ministry of Industry and Trade and the Ministry of Finance for appraisal. Within 10 days after receiving the complete electricity price adjustment dossier of Electricity of Vietnam, the Ministry of Industry and Trade and the Ministry of Finance shall organize an appraisal thereof for the Ministry of Industry and Trade to submit it to the Prime Minister for consideration and approval.

If the Prime Minister has no reply within 15 working days after the Ministry of Industry and Trade submits the electricity price adjustment plan, Electricity of Vietnam may adjust the average electricity sale price at the level of 5%.

4. If the average electricity sale price difference due to fluctuation of basic input parameters is smaller than 5% as compared to the current electricity sale price (G < 5% GHH), Electricity of Vietnam shall calculate the electricity production and business costs not yet fully accounted into the electricity sale price for allocation to the average electricity sale price in order to increase the average electricity sale price by 5% at most, and adjust the electricity sale price according Point a, Clause 3 of this Article.

If it is necessary to increase the average electricity sale price by more than 5%, Electricity of Vietnam shall adjust the electricity sale price under Point b, Clause 3 of this Article.

5. The electricity price valorization fund is established when G < 0 and the electricity production and business costs not yet fully accounted into the electricity price have been fully allocated.

Electricity of Vietnam shall establish, manage and use the electricity price valorization fund under the joint guidance of the Ministry of Finance and the Ministry of Industry and Trade.

If, after the establishment of the electricity price valorization fund, the complete electricity sale price difference GTP is5% GHH, Electricity of Vietnam shall reduce the average electricity sale price to be equal to the computed average electricity sale price and at the same time report such to the Ministry of Industry and Trade and the Ministry of Finance for supervision.

6. After adjusting the average electricity sale price, Electricity of Vietnam shall determine the detailed electricity sale price tariffs for different groups of customers based on the adjusted average electricity sale price and the structure of electricity retail prices under current regulations.

Article 5. Adjustment of electricity retailing prices by electricity retailing units which buy electricity from national grids in combination with on-spot generated electricity sources for retail

The electricity retail prices applicable to different groups of electricity users by electricity retailing units which buy electricity from national grids in combination with on-spot generated electricity sources for retail shall be adjusted corresponding to the adjustment of the average electricity sale price.

Article 6. Dossiers on adjustment of electricity sale prices according to basic input parameters

A dossier on adjustment of the electricity sale price according to basic input parameters has the following principal contents:

1. Report on the electricity sale price adjustment plan.

2. Basic input parameters for determining the computed average electricity sale price.

3. Table of calculation of components of generated-electricity price difference due to fluctuations of basic input parameters.

4. Explanation about the electricity sale price adjustment plan, evaluation of the fluctuation of generated-electricity costs, analysis of new electricity prices’ impacts on every group of electricity users.

5. Electricity production and business costs not yet fully accounted into the electricity sale prices which have been already allocated, and the remainder.

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

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 7. Organization of implementation

1. The Electricity Regulatory Authority of Vietnam shall:

a/ Assume the prime responsibility for, and coordinate with the Ministry of Finance (the Price Management Department) in, verifying or appraising electricity sale price adjustment plans according to regulations;

b/ Inspect and supervise the adjustment of electricity sale prices;

c/ Guide Electricity of Vietnam in elaborating annual electricity production plans and techno-economic norms; appraise and submit to the Ministry of Industry and Trade for approval annual electricity production plans and techno-economic norms of Electricity of Vietnam;

d/ Guide the contents of electricity production and business costs of Electricity Vietnam to be inspected and prescribe the contents to be audited;

e/ Publicize annual electricity production and business costs;

f/ Settle problems related to the formulation and adjustment of electricity sale prices.

2. Electricity of Vietnam shall:

a/ Adjust the detailed electricity sale price tariffs applicable to different groups of users when adjusting the average electricity sale price under this Circular;

b/ Before the 25th every month, report to the Electricity Regulatory Authority of Vietnam on the following month’s operation plan as the basis for inspection and supervision of the electricity sale price adjustment; analyze the difference between the real generated electricity output structure and the monthly plan output structure;

c/ Annually before November 15, submit to the Ministry of Industry and Trade for approval the electricity production plan and techno-economic norms for the following year;

d/ Annually before June 1, report to the Ministry of Industry and Trade and the Ministry of Finance on the financial statement of electricity production and business results already audited independently, electricity production and business costs at different stages and the electricity sale price of the fiscal year;

e/ Report to the Ministry of Industry and Trade and the Ministry of Finance on the results of examination and computing of adjusted average electricity sale prices under this Circular;

f/ Adjust annual electricity production plans and submit them to the Ministry of Industry and Trade for approval upon major fluctuations in additional power load demands, electricity source structure or hydrological conditions;

g/  Publicize the principal contents of electricity price adjustment plans immediately after the adjustment of electricity sale prices under this Circular;

h/ Add to electricity trading contracts of electricity generation units the contents of electricity sale price adjustment according to fluctuations of the price of the main fuel for electricity production, with regard to electricity trading contracts without this adjustment content, before adjusting the electricity sale prices.

3. Vietnam National Coal, Mineral Industries Holding Corporation Limited, PetroVietnam Gas Corporation and Vietnam National Petroleum Corporation shall send written notifications to Electricity of Vietnam when they change coal, gas or oil prices.

Article 8. Effect

1. This Circular takes effect on September 1, 2011.

2. Problems arising in the course of implementation shall be reported to the Ministry of Industry and Trade for appropriate supplementation and amendment.-

For the Minister of Trade and Industry
Deputy Minister
HOANG QUOC VUONG