Circular 31/2022/TT-BCT promulgate electricity generation price bracket

CIRCULAR

Amending and supplementing a number of articles of the Minister of Industry and Trade's Circular No. 57/2014/TT-BTC dated December 19, 2014, prescribing the method and order for formulation and promulgation of the electricity generation price bracket and the Minister of Industry and Trade's Circular No. 57/2020/TT-BCT dated December 31, 2020, on providing method to determine electricity generation prices and power purchase agreement

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Pursuant to the Government’s Decree No. 98/2017/ND-CP dated August 18, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Electricity Law dated December 03, 2004; the Law Amending and Supplementing a Number of Articles of the Electricity Law dated November 20, 2012; and the Law Amending and Supplementing a Number of Articles of the Electricity Law dated January 11, 2022;

Pursuant to the Government’s Decree No. 137/2013/ND-CP dated October 21, 2013, detailing a number of articles of the Electricity Law and the Law Amending and Supplementing a Number of Articles of the Electricity Law;

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

The Minister of Industry and Trade hereby promulgates the Circular amending and supplementing a number of articles of the Minister of Industry and Trade's Circular No. 57/2014/TT-BTC dated December 19, 2014, prescribing the method and order for formulation and promulgation of the electricity generation price bracket and the Minister of Industry and Trade's Circular No. 57/2020/TT-BCT dated December 31, 2020, on providing method to determine electricity generation prices and power purchase agreement.

Article 1. Amending and supplementing a number of articles of the Minister of Industry and Trade's Circular No. 57/2014/TT-BTC dated December 19, 2014, prescribing the method and order for formulation and promulgation of the electricity generation price bracket

1. To amend and supplement Clause 2 Article 2 as follows:

“2. Standard power plant refers to a thermal power plant with popular capacity defined in the National master plan for power development, representing the type of thermal power plant with the same electricity generation technology, same type of fuels which are used to calculate the electricity generation price bracket for such type of power plant.”

2. To amend and supplement Clause 4 Article 2 as follows:

“4. Total investment amount includes all construction investment costs of a project determined according to current law provisions, compliance with the basic design and other contents of the construction investment feasibility study report.”

3. To amend and supplement Clause 2 Article 3 as follows:

“2. With regard to thermal power plants: Ceiling price is the electricity generation price of the standard power plant, the method of determining the electricity generation price of the standard power plant is specified in Articles 5, 6, 7 and 8 of this Circular.”

4. To amend and supplement Clause 3 Article 6 as follows:

“3. Investment unit cost refers to the investment cost for 01 kW of average net capacity of the standard power plant (excluding the cost of ports and infrastructure, costs related to storage, recycling and transportation of LNG from warehouse to power plant) which is calculated on the basis of data in the approved construction investment feasibility study report, the total effective investment amount at the time of calculating the electricity generation price bracket or actual data used to negotiate the power purchase agreement (if any), update the foreign exchange rate at the time of calculation.”

5. To amend and supplement Point a Clause 4 Article 6 as follows:

“a) Loan interest rate r_d (%) is calculated by weighted average interest rate of loan capital sources in domestic currency and foreign currencies according to the following formula:

r_d = D_F x r_d.F + D_D x r_d.D

In which:

6. To amend and supplement Clause 5 Article 6 as follows:

“The average annual electrical power at the A_bq delivery point (kWh) of the standard power plant is determined by the following formula:

A_bq = P_t x T_max x (1 - k_CS)

In which:

P_t: Total net capacity of the standard power plant (kW);

T_max: The number of hours of operation of the power plant at average maximum capacity (hour);

k_CS: The rate of power loss is averaged over the entire economic life of the power plant as agreed by the two parties on the basis of the equipment manufacturer’s technical documents; if it is unknown, it is allowed to use the average data of plants with similar technology and installation capacity (%).”

7. To amend and supplement Article 8 as follows:

“Article 8. Method to determine the variable cost of standard power plants in the year applied the price bracket

The variable cost of the standard power plant in the year applied the price bracket (VC) which is a component to recover fuel costs and other variable costs of the standard power plant with the number of hours of operation at average maximum capacity, is determined by the following formula:

VC = HR x P_nlc x (1+f)

In which:

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

HR: Net heat loss rate is determined at the interest rate specified in Appendix 1 to this Circular, calculated by kcal/kWh, kJ/kWh or BTU/kWh;

f: Percentage of total costs for starting operation, fuel cost - cost of secondary materials and other variable costs for electricity generation in comparison with main fuel cost, is prescribed in Appendix 1 to this Circular (%);

P_nlc: Main fuel price of the standard power plant (exclusive of VAT), calculated by VND/kcal, VND/kJ or VND/BTU, is determined as follows:

- For coal-fired power plants, the coal price includes losses, operation and management fees, insurance (if any) and excludes transportation charge. In case the agreement for fuel supply cannot separate the transportation charge, the main fuel price is determined to be equal to the price in the agreement for sale and purchase of main fuel;

- For a combined-cycle gas turbine plant using natural gas, the main fuel price is the gas price at the well mouth, excluding transportation costs to the plant;

- For a combined-cycle gas turbine power plant using LNG, the main fuel price includes imported LNG prices, TNG import duty (if any), cost for transportation of LNG to the recycling warehouse and does not include cost for storage, recycling and distributing gas after re-regeneration (if any).

In case where the power plant has not yet had a contract for provision of fuel, the data in agreements between the project owner and fuel providers, or data calculated by consultancy organizations shall be used.

8. To amend and supplement Article 10 as follows:

“Article 10. Order for formulation and promulgation of the electricity generation price bracket

1. Within 15 working days after the construction investment feasibility study report of the power plant is approved, the project owner of the power plant shall take responsibility for providing the construction investment feasibility study report to the Vietnam Electricity.

2. Before November 01 every year, the Vietnam Electricity shall:

a) On the basis of the approved construction investment feasibility study report, the total investment amount effective at the time of calculation of the electricity generation price bracket received by the Vietnam Electricity before October 15 of each year or actual data of power purchase agreement negotiation (if any), the Vietnam Electricity shall calculate or hire a consultant to calculate the electricity generation prices of thermal power plants in accordance with Articles 5, 6, 7 and 8 of this Circular;

b) Propose the selection of a standard power plant, select parameters used to calculate electricity generation prices for a standard power plant specified in Appendix 1 to this Circular in accordance with the actual performance of power purchase agreements and make a dossier to calculate the electricity generation price bracket of the power plants in accordance with Article 11 of this Circular, and submit it to the Electricity Regulatory Authority for appraisal;

c) Calculate the ceiling price of the hydroelectric power plant according to the method specified in Article 9 of this Circular.

3. Within 05 working days from the date of receipt of the dossier for calculation of the electricity generation price bracket mentioned at Point b Clause 2 of this Article, the Electricity Regulatory Authority shall check the validity of the dossier. In case of necessity, the Electricity Regulatory Authority shall send a written request to the Vietnam Electricity to amend, supplement or clarify the contents of the dossier. Within 15 working days after receiving the request for amendment, supplement or explanation for clarification of the contents in the dossier of the Electricity Regulatory Authority, the Vietnam Electricity shall send a written report explaining the contents of the dossier upon request.

4. Within 20 working days from the date of receipt of the valid dossier and the explanation report to clarify the contents of the dossier of the Vietnam Electricity, the Electricity Regulatory Authority shall select standard power plant and organizing the appraisal of the electricity generation price bracket submitted by the Vietnamese Electricity.

5. Within 15 working days from the date of organizing the appraisal of electricity generation price bracket, the Electricity Regulatory Authority shall complete the dossier and submit it to the Minister of Industry and Trade for approval of electricity generation price bracket for the following year and publish it on the e-portal of the Electricity Regulatory Authority. In case the electricity generation price bracket of the following year has not been announced, it is allowed to temporarily apply the most recent effective electricity generation price bracket.”

9. To amend and supplement Clause 1 Article 11 as follows:

“1. The report of the Vietnam Electricity on the selection of parameters of the standard power plants and calculation of the electricity generation price brackets of the power plants specified at Points b and c Clause 2 Article 10 of this Circular.”

10. To amend and supplement net fuel loss rate and main fuel price in Appendix 2 as follows:

Article 2. Amending and supplementing a number of articles of the Minister of Industry and Trade’s Circular No. 57/2020/TT-BCT dated December 31, 2020, on providing method to determine electricity generation prices and power purchase agreement

1. To amend and supplement Clause 4 Article 3 as follows:

“4. Power purchase agreement price is used to compare with the electricity generation price bracket in the base year

a) The electricity generation price must be within the electricity generation price bracket in the base year of the power plant that is issued by the Minister of Industry and Trade. In which, the power purchase agreement price of a thermal power plant used to compare with the electricity generation price bracket in the base year shall be calculated on a basis of cost components corresponding to the components of costs used to calculate the electricity generation price bracket.

In case the base year of a thermal power plant does not have an electricity generation price bracket, the power purchase agreement price of the thermal power plant shall be calculated and converted on the basis of corresponding cost components to compare with the electricity generation price bracket of the most recent year of that type of power plant;

b) For projects that have commenced but have not signed power purchase agreements before the effective date of this Circular:

The electricity generation price must be within the electricity generation price bracket in the year of negotiation of the power purchase agreement. In which, the power purchase agreement price of a thermal power plant used to compare with the electricity generation price bracket shall be calculated and converted on a basis of cost components corresponding to the components of costs used to calculate the electricity generation price bracket.”

2. To amend and supplement Clause 3 Article 7 as follows:

“3. Components of variable price revised according to other changes in the base year  are determined according to the following formula:

In which:

C_vlp: Total annual cost of secondary materials of the power plant, which is determined according to quantity and unit price of secondary materials used for generation of electricity in the base year (VND). If there is no data to calculate the total annual cost of secondary materials in the base year, it is allowed to use these cost components at the time when there is enough data and slip to the base year at the rate of 2.5%/year to calculate the total annual cost of secondary materials in the base year;

C_kđ: Total cost for starting operation consists of fuel cost and other costs (VND); permissible number of starts shall be negotiated by the two parties on the basis of demand for electric power system and operation characteristic of the power plant. If there is no data to calculate the total cost for starting operation in the base year, it is allowed to calculate the value of this total cost at the time of negotiation and slip to the base year at the rate of 2.5%/year;

C_k: Annual cost for repair and maintenance including regular cost for repair and maintenance, which is calculated on the basis of total investment capital for construction and equipment of the power plant; the rate of regular repair cost is agreed upon by the two parties, but not exceeding the rate prescribed in Appendix 1 to this Circular and expenses for dredging channels into ports are as agreed by the two parties (if any) (VND). If there is no data to calculate expenses for dredging channels into ports in the base year, it is allowed to calculate the value of this total cost at the time of negotiation and slip to the base year at the rate of 2.5%/year;

A_GN: Average electricity energy generated in multiple years at the delivery point between the seller and buyer, calculated according to Clause 1 Article 6 of this Circular (kWh).

3. To add Clause 5 Article 12 as follows:

“5. The base year of power plants negotiating electricity prices according to the settled investment capital is the year of approving the final investment capital.”

4. To amend and supplement Clause 2 Article 13 as follows:

“2. Based on conditions for actual loans and project's financial capability, the two parties shall reach an agreement on converting the power plant's average fixed prices into fixed prices for each year (FC_j fixed price for year j), provided that the average fixed cost remains unchanged in comparison with the cost agreed by the two parties and conforms to the following principles:

a) Financial discount rate in the calculation of fixed price for each year as agreed by the two parties according to the financial internal rate of return (IRR) of the power plant;

b) The project owner shall pay loans for investing in construction of power plants according to the time limit for loan payment.”

5. To amend and supplement Point c Clause 3 Article 15 as follows:

“c) Components of variable price revised according to other changes in the j year  are determined according to the following formula:

In which:

: Components of variable price revised according to other changes of the power plant in the base year is determined according to Clause 3 Article 7 of this Circular;

i: Cost slippage rate of components of variable price revised according to other changes in accordance with the ratio provided in Appendix 1 to this Circular.

k_HS: Proportion of performance attenuation in year j (%);

l: Ordinal numbers of commercial operation year of the power plant (counted by the date from the time of commercial operation of the whole plant, the first commercial operation year of the power plant is counted from the commercial operation date of the first operating unit to the end of the first commercial operation year of the power plant. l=1);

m: Ordinal numbers of payment years starting from the base year (for the base year m=1).”

6. To add Clause 6 to Article 28 as follows:

“6. For power plant that has signed a power purchase agreement, if necessary, the two parties shall negotiate to amend the formula of components of variable cost revised according to other changes of the power plant specified at Point c Clause 3 Article 15 of this Circular.”

7. To amend and supplement Point c Clause 1.3 Section I Appendix V of the sample power purchase agreements attached to the Circular as follows:

“c) Components of variable cost revised according to other changes:

Components of variable price revised according to other changes in the j year  (VND/kWh) are determined according to the following formula:

In which:

: Components of variable price revised according to other changes of the power plant in the base year is ... (VND/kWh);

k_HS: Proportion of performance attenuation in year j (%);

l: Ordinal numbers of commercial operation year of the power plant (counted by the date from the time of commercial operation of the whole plant, the first commercial operation year of the power plant is counted from the commercial operation date of the first operating unit to the end of the first commercial operation year of the power plant, l=1);

m: Ordinal numbers of payment years starting from the base year (for the base year m=1);

i: Cost slippage rate of components of variable price revised according to other changes according to this Circular.”

Article 3. Effect

1. This Circular takes effect from December 28, 2022.

2. To annul Article 4 of the Minister of Industry and Trade's Circular No. 57/2014/TT-BCT dated December 18, 2014, prescribing the method and order for formulation and promulgation of the electricity generation price bracket.

3. To annul Article 27 of the Minister of Industry and Trade's Circular No. 57/2020/TT-BCT dated December 31, 2020, on providing method to determine electricity generation prices and power purchase agreement.

4. Any difficulties arising in the course of implementation should be reported to the Electricity Regulatory Authority for consideration and settlement under competence, or reported to the Ministry of Industry and Trade for settlement./.