Circular 17/2025/TT-BCT main contents of a wholesale power purchase agreement

CIRCULAR

Regulating the method of formulation, and the order, procedures for approving the wholesale electricity price bracket; the method of determining the wholesale electricity price; the main contents of a wholesale power purchase agreement

Pursuant to the Law on Electricity dated November 30, 2024;

Pursuant to the Government’s Decree No. 96/2022/ND-CP dated November 29, 2022 providing the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade; Decree No. 105/2024/ND-CP dated August 1, 2024 amending and supplementing a number of articles of Government’s Decree No. 96/2022/ND-CP and Government’s Decree No. 26/2018/ND-CP dated February 28, 2018 on the Charter of organization and operation of Vietnam Electricity;

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

The Minister of Industry and Trade promulgates a Circular providing the method of formulation, and the order, procedures for approving the wholesale electricity price bracket; the method of determining the wholesale electricity price; the main contents of a wholesale power purchase agreement.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. This Circular provides for the method of formulation, and the order, procedures for approving the wholesale electricity price bracket; the method of determining the wholesale electricity price and the main contents of a wholesale power purchase agreement between Vietnam Electricity and the Power Corporation as prescribed in Clause 5, Article 44 and Point d, Clause 3, Article 50 of the Law on Electricity No. 61/2024/QH15.

2. This Circular applies to Vietnam Electricity; Power Corporation; and related organizations and individuals.

Article 2. Interpretation of terms

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

1. The State electricity management authority is a unit under the Ministry of Industry and Trade, which is assigned functions, tasks and powers to manage electricity according to regulations.

2. The electricity system and electricity market operation unit is a unit performing the functions of the National Power System Dispatch Unit and the Electricity Market Transaction Regulation Unit as prescribed in the Law on Electricity (currently the National Electricity System and Market Operation Company Limited - NSMO).

3. The wholesale electricity price is the electricity price sold by Vietnam Electricity to the Power Corporation for resale to electricity customers.

4. Year N is the calendar year from January 1 to December 31 of the year when the price bracket and price are applied.

5. Year (N-1) is the calendar year immediately preceding Year N.

6. Year (N-2) is the calendar year immediately preceding Year (N-1).

7. The commercial electricity output of the Power Corporation is the electricity output (including the commercial electricity output sold in areas whose grids are yet to be connected to the national grid) that the Power Corporation sells to electricity customers and electricity retailers.

8. The Power Corporation means the power corporations which are the members of the Vietnam Electricity, including the Northern Power Corporation, the Southern Power Corporation, the Central Power Corporation, the Hanoi City Power Corporation and the Ho Chi Minh City Power Corporation.

Chapter II

METHOD OF DETERMINING WHOLESALE ELECTRICITY PRICE BRACKET AND WHOLESALE ELECTRICITY PRICE

Article 3. Method of determining wholesale electricity price bracket

The wholesale electricity price in the wholesale electricity price bracket of Vietnam Electricity sold to Power Corporation i in Year N is determined according to the following formula:

In which:

1. g_TCTĐLi,k,N is the wholesale electricity price within the wholesale electricity price bracket of Vietnam Electricity sold to Power Corporation i in Year N (VND/kWh);

2. TDT_i,k,N is the total expected revenue of Power Corporation i in Year N (VND) determined based on electricity sales revenue and other revenues according to regulations (if any). In which, electricity sales revenue is determined according to:

a) The expected commercial electricity output  is determined according to the annual electricity production output according to two options: the low option with the electricity production output equal to 90% of the output according to the basic option, the high option with the electricity production output equal to 110% of the output according to the basic option; in which, the output according to the basic option is the expected commercial electricity output of Year N at the time of calculation;

b) Commercial electricity output structure for customer groups;

c) Retail electricity price currently applied according to regulations of the Ministry of Industry and Trade.

3. C_PPi,N  is the total cost of electricity distribution and retail of Power Corporation i in Year N (VND) determined according to Article 4 of this Circular;

4. LN_i,N is the standard profit of Power Corporation i in Year N (VND) determined according to Article 5 of this Circular;

5. is the expected cost of buying electricity through the spot electricity market and power purchase agreement (of allocated power plants and power plants signing direct power purchase agreement with Power Corporation i) in Year N according to the regulations on operating the Competitive Wholesale Electricity Market issued by the Minister of Industry and Trade (VND);

6. is the expected cost of electricity buying from power plants, electricity generation units that sign power purchase agreements with Power Corporation i during the period of not participating in the competitive electricity market and rooftop solar power of Power Corporation i in Year N according to contracts in accordance with law regulations (VND);

7. A_GNi,N is the actual electricity received from the source expected by the Power Corporation i in Year N (kWh);

8. is the expected electricity output purchased directly through the spot electricity market from allocated power plants and from power plants that directly sign power purchase agreements with Power Corporation i in Year N according to the regulations on the operation of the competitive wholesale electricity market issued by the Minister of Industry and Trade (kWh);

9. is the expected electricity output purchased from power plants, electricity generation units signing power purchase agreements with Power Corporation i during the time of not participating in the competitive electricity market and from rooftop solar power by Power Corporation i in Year N under contracts in accordance with regulations of law (kWh).

Article 4. Principles for determining electricity distribution and retail costs

Electricity distribution and retail costs in Year N of Power Corporation i  are determined according to the following formula:

In which:

1. C_VLi,N is the total material cost in Year N (VND), determined based on the norms issued by competent agencies and organizations;

2. C_TLi,N is the total salary cost of Year N (VND), including total salary cost and salary-related costs such as health insurance, social insurance, unemployment insurance and union fees determined according to relevant legal regulations;

3. C_KHi,N is the total expected depreciation cost of fixed assets in Year N (VND), determined based on the value of existing fixed assets and expected fixed assets to be put into use in Year N according to the regulations on management, use and depreciation of fixed assets issued by the Ministry of Finance or other competent agencies and organizations;

4. C_SCLi,N is the total major repair cost in Year N (VND), determined on the basis of the major repair plan based on the norms issued by the competent authority or organization;

5. C_MNi,N is the total outsourced service costs in Year N (VND), including standard costs and non-standard costs. Standard costs are determined based on norms issued by competent agencies and organizations. Non-standard costs are determined according to other relevant legal provisions and additional reasonable costs expected to arise in Year N;

6. C_BTKi,N is the total other cost in currency in Year N (VND), including standard costs and non-standard costs. Standard costs are determined based on standards issued by competent agencies and organizations. Non-standard costs are determined according to other relevant legal provisions and additional reasonable costs expected to arise in Year N;

7. C_TCi,N is the total expected financial cost in Year N (VND), including total interest expense, bonds, financial leases and fees for borrowing capital, payable in Year N, determined according to contracts, legal documents, expected loans for production and business activities in Year N; the expected exchange rate difference in Year N is determined according to financial accounting regulations, in which the floating loan interest rate is expected for Year N (when there is no actual data) as follows:

a) The foreign currency loan interest rate is determined by the average interest rate of SOFR (Secured Overnight Financing Rate) for the 180-day average term (180 Days - Average) of the 36 consecutive months prior to the time of creating the price bracket announced by the Fed (website: www.newyorkfed.org) plus the bank's loan arrangement fee rate which is 3%/year;

b) The domestic currency loan interest rate is determined by the average of the 12-month post-paid deposit interest rates in Vietnamese Dong for individual customers in 05 years immediately preceding the year of formulating the price bracket, determined on September 30 of each year by four commercial banks (Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Trade, Joint Stock Commercial Bank for Investment and Development of Vietnam, Vietnam Bank for Agriculture and Rural Development or legal successors of these banks) plus the service fee rate of the banks of 3%/year.

8. C_PTKHi,N is the cost of customer development, customer care and communication in Year N (VND), determined based on the norms issued by competent agencies and organizations;

9. C_CTi,N is the meter cost in Year N (VND), determined according to the standards issued by competent agencies and organizations;

10. C_TSXi,N is the self-production cost in Year N (VND), including the cost of electricity supply and costs related to distribution and sale of electricity to rural, mountainous and border areas and on islands whose grids are yet to be connected to the national grid of Power Corporation i (if any);

11. C_CBi,N is the cost of Power Corporation i to mobilize backup generators of electricity customers to supplement the supply to the national power system in urgent situations that seriously threaten the ability to ensure electricity supply in Year N (if any) (VND);

12. C_LTi,N is the reasonable and valid cost of Power Corporation i to invest in and operate the electricity storage system in case Power Corporation i is assigned by a competent authority to invest in the electricity storage system to support the operation of the power system (VND);

13. GT is the cost deductions determined by net income from renting electric poles, liquidation and sale of fixed assets (VND);

Article 5. Principles for determining the standard profit of the Power Corporation

The expected allowable profit in Year N (LN_i,N) of Power Corporation i is determined according to the following formula:

In which:

1. is the equity capital of Power Corporation i on June 30, Year (N-1) (VND);

2. ROE_N is the pre-tax Return on Equity in Year N applied to Power Corporation i (%), determined to preserve and develop the business capital of the enterprise, not exceeding the pre-tax profit margin stipulated in the Government's Decree on the mechanism and time for adjustment of the average retail electricity price.​

Article 6. Method of formulation of wholesale electricity price

The wholesale electricity price sold by Vietnam Electricity to Power Corporation in Year N is determined according to the following formula:

In which:

1. g_TCTĐLi,N is the wholesale electricity price sold by Vietnam Electricity to Power Corporation i in Year N (VND/kWh);

2. TDT_i,N is the total expected revenue of Power Corporation i (VND) determined based on electricity sales revenue and other revenues according to regulations (if any). In which, electricity sales revenue is determined according to:

a) The expected commercial electricity output is determined based on the annual electricity production output according to the basic plan; in which, the output according to the basic plan is the expected commercial electricity output of Year N at the time of calculation;

b) The commercial electricity output structure for customer groups;

c) The retail electricity price currently applied according to the regulations of the Ministry of Industry and Trade.

Chapter III

PROCEDURE FOR FORMULARION, APPRAISAL, APPROVAL OF WHOLESALE ELECTRICITY PRICE BRACKET

Article 7. Order, procedures for approving wholesale electricity price bracket

1. Before December 20 every year (Year (N-1)), Vietnam Electricity is responsible for submitting to the State electricity management authority the dossier of the wholesale electricity price bracket for Year N for appraisal and submitting to the Minister of Industry and Trade for approval the wholesale electricity price bracket.

2. The State electricity management authority is responsible for reviewing the dossier of the wholesale electricity price bracket. In case the dossier is not complete or valid as prescribed in Article 8 of this Circular, Vietnam Electricity is responsible for completing and supplementing the dossier within 05 working days from the date of receiving the request of the State electricity management authority.

3. Within 25 days from the date of receipt of a complete and valid dossier as prescribed in Article 8 of this Circular, the State electricity management authority shall be responsible for appraising the dossier of the wholesale electricity price bracket for Year N and submitting it to the Minister of Industry and Trade for approval.

4. Within 07 working days from the date of submission by the State electricity management authority, the Minister of Industry and Trade shall approve the wholesale electricity price bracket for Year N.​

Article 8. Wholesale electricity price bracket dossier

1. Explanation of the basis for creating the wholesale electricity price bracket for Year N.

2. Explanation and calculation tables of the wholesale electricity price bracket for Year N, including:

a) Report on the assessment of the estimated implementation of the indicators of commercial electricity output, electricity loss rate, revenue implementation, and expenses for Year (N-1);

b) Explanation and calculation of components of cost and profits of Power Corporation i, including:

b1) Summary table of electricity distribution and retail costs of the Power Corporation;

b2) Table of depreciation of existing fixed assets in Year N, including: a summary of basic depreciation values ​​of fixed assets estimated to be available on the books as of December 31, Year (N-1); Estimated original value of newly increased fixed assets in Year N and estimated depreciation of newly increased fixed assets in Year N; Estimated newly increased fixed assets in Year N according to the list of power projects (including data on total investment, temporary increase in assets, expected power connection time, expected depreciation costs for Year N);

b3) Table of interest for a planned loan in Year N according to credit contracts;

b4) Table of estimated exchange rate difference costs in Year N;

b5) Summary table of changes in the number of employees for electricity distribution and retail activities estimated to be implemented in Year (N-1), average labor plan for electricity distribution and retail activities in Year N and plan of salary and salary-related cost for electricity distribution and retail activities expected for Year N;

b6) Table of expected cost and revenue plans in areas whose grids are yet to be connected to the national grid (if any);

b7) Table of estimated costs for purchasing rooftop solar power in Year N;

b8) Owner's equity on June 30, Year (N-1) (VND).

c) Explanation and calculation of major repair costs, material costs, outsourced service costs, other costs in currency, customer development costs, customer care and communication costs, meter costs;

d) Explanation and calculation table of costs for buying electricity from the electricity market of Power Corporation i in Year N, including:

d1) Explanation of input parameters for calculating the simulation of costs for buying electricity from the electricity market, including: Forecasted load in Year N; general data of the electricity market in Year N: market electricity price, market capacity price, conversion coefficient according to electricity loss; Data of power plants allocated contracts and power plants signing direct contracts with Power Corporation i in Year N: contract price, contract output, planned output;

d2) Table of calculation of electricity purchase costs from the electricity market of Power Corporation i in Year N.

dd) Explanation and calculation table of taxes and fees of power plants signing direct contracts with Power Corporation i in Year N, including:

dd1) Explanation of environmental protection costs for industrial wastewater, environmental protection fees for cooling wastewater, resource tax, water resource exploitation license fee, forest environmental services, and other related costs;

dd2) Table of calculation of allocation of taxes and fees of power plants signing direct contracts with Power Corporation i in Year N.​

3. Attached documents, including:

a) Audited financial statements for Year (N-2) conducted by an independent auditing agency: Balance sheet, business performance report, cash flow report, explanatory report;

b) Norms of cost components used in the dossier approved by competent authorities.

4. In case of having audited financial statements for Year (N-1), the figures for Year (N-1) specified in Clause 2 of this Article shall be taken from updated figures according to the audited financial statements.

5. The wholesale electricity price bracket dossier must be made in the form of a physical document, a data message having the same validity as a document in accordance with law. Vietnam Electricity is responsible for directly sending 01 set of dossiers in the form of data messages and directly sending 01 set of dossiers in the form of a physical document (if necessary) to the State electricity management authority.

Article 9. Adjusted wholesale electricity price bracket

1. In case it is necessary to adjust the wholesale electricity price bracket in accordance with fluctuations in commercial electricity output, electricity production and business costs, electricity purchase costs from the electricity market, electricity purchase costs from plans that have signed direct electricity purchase and sale contracts with the Power Corporation, revenue and standard profit of the Power Corporation, Vietnam Electricity is responsible for creating an adjusted wholesale electricity price bracket, sending a calculation report to the State electricity management authority for appraisal, and submitting it to the Minister of Industry and Trade for consideration and decision according to the regulations on documents in Clause 5 of this Article.

2. The State electricity management authority is responsible for reviewing the dossier of the adjusted wholesale electricity price bracket. In case the dossier of the adjusted wholesale electricity price bracket is not complete and valid according to Clause 5 of this Article, Vietnam Electricity is responsible for completing and supplementing the dossier within 05 working days from the date of receiving the request of the State electricity management authority.

3. Within 25 days from the date of receiving the complete and valid dossier according to Clause 5 of this Article, the State electricity management authority is responsible for appraising and submitting to the Minister of Industry and Trade for approval of the adjusted wholesale electricity price bracket for Year N.

4. Within 07 working days from the date of submission by the State electricity management authority, the Minister of Industry and Trade shall approve the adjusted wholesale electricity price bracket for Year N.​

5. The dossier of the adjusted wholesale electricity price bracket for Year N includes:

a) A report on the development of the adjusted wholesale electricity price bracket for Year N;

b) Explanation and calculations of the adjusted wholesale electricity price bracket for Year N, including a report on the assessment of the implementation of the indicators of commercial electricity output, electricity loss rate, revenue implementation, costs, profits, and estimated equity capital for Year N; Explanation and calculations, forecasting the cost and profit components of the Power Corporation in the adjusted wholesale electricity price bracket;

c) Other relevant documents and papers (if any).

6. The dossier of the adjusted wholesale electricity price bracket must be established in the form of a physical document, a data message having the same validity as a document in accordance with law. Vietnam Electricity is responsible for directly sending 01 set of dossiers in the form of data messages and directly sending 01 set of dossiers in form of a physical document (if necessary) to the State electricity management authority.

Chapter IV

WHOLESALE POWER PURCHASE AGREEMENTS

Article 10. Main content sof a wholesale power purchase agreement

The main contents of the wholesale power purchase agreement are issued together with this Circular. The main contents of the wholesale power purchase agreement specified in the Appendix issued together with this Circular are the basis for the Seller and the Buyer to negotiate and sign the wholesale electricity contract. The Seller and the Buyer have the right to negotiate and agree to supplement the terms specifically stipulated in the wholesale power purchase agreement in accordance with law regulations.​

Article 11. Responsibilities of the parties after signing a wholesale power purchase agreement

Vietnam Electricity is responsible for sending a copy of the wholesale power purchase agreement to the State electricity management authority after the agreement has been officially signed.

Chapter V

IMPLEMENTATION PROVISIONS

Article 12. Responsibilities of relevant units

1. The State electricity management authority is responsible for appraising the annual wholesale electricity price bracket, the adjusted wholesale electricity price bracket and submitting it to the Minister of Industry and Trade for approval.

2. Vietnam Electricity is responsible for calculating and reporting the wholesale electricity price bracket sold by Vietnam Electricity to the Power Corporation annually, and directing the Power Corporation to prepare a data set to create the wholesale electricity price bracket according to this Circular.

3. The Power Corporation is responsible for preparing a data set to create the annual wholesale electricity price bracket and submitting it to Vietnam Electricity for reporting to the State electricity management authority according to this Circular.

4. The electricity system and electricity market operation unit is responsible for calculating the simulation of the electricity purchase cost of the Power Corporation from the electricity market to serve the calculation of the wholesale electricity price bracket.

5. Vietnam Electricity and the Power Corporation are responsible for negotiating the wholesale power purchase agreement according to this Circular, ensuring the accuracy, reasonableness and validity of the data and documents provided.

6. Vietnam Electricity and the Power Corporation are responsible for ensuring the effectiveness of investing in the electricity storage system in supporting the operation of the electricity system.

Article 13. Effect

1. This Circular takes effect on February 01, 2025.

2. The following Circulars are annulled:

a) Circular No. 26/2024/TT-BCT dated November 15, 2024 of the Minister of Industry and Trade, stipulating the method of creating the wholesale electricity price bracket;

b) Circular No. 39/2015/TT-BCT dated November 18, 2015, of the Minister of Industry and Trade, stipulating the electricity distribution system;

3. Articles 3, 4 and 7 of Circular No. 12/2024/TT-BCT dated August 1, 2024 of the Minister of Industry and Trade, amending and supplementing a number of Circulars of the Minister of Industry and Trade related to the dispatch and operation of the national power system and the electricity market are annulled.

4. The method of formulating, appraising and approving the wholesale electricity price bracket for 2024 shall continue to be implemented in accordance with Circular No. 26/2024/TT-BCT.

5. Any problems arising in the implementation process should be reported to the Ministry of Industry and Trade for consideration and appropriate amendments./.

* All Appendices are not translated herein.