Thông tư 14/2010/TT-BCT

CIRCULAR

ON THE METHOD AND PROCEDURE FOR DETERMINATION, PROMULGATION AND MANAGEMENT OF ELECTRICITY TRANSMISSION PRICE

Pursuant to the Government’s Decree No. 189/2007/ND-CP dated December 12, 2007 on the functions, missions, authority and organizational structure of the Ministry of Industry and Trade

Pursuant to the Electricity Law dated December 03, 2004;

Pursuant to the Government’s Decree No. 105/2005/ND-CP dated August 17, 2005 on details and guidelines for the implementation of certain articles of the Electricity Law;

Pursuant to the Decision No. 153/2008/QD-TTg dated November 28, 2008 by the Prime Minister on the functions, missions, authority and organizational structure of the Electricity Regulatory Authority under the Ministry of Industry and Trade;

Ministry of Industry and Trade regulates the method and procedure for determination, promulgation and management of the electricity transmission price as follows:

Chapter 1.

GENERAL

Article 1. Scope and regulated entities

1. This Circular defines the method and procedure for determination, promulgation and management of the electricity transmission price.

2. This Circular applies to the Electricity Vietnam, National Power Transmission Corporation, the operator of the national electricity system and market, power trading enterprises and organizations incurring the cost of electric power transmission.

Article 2. Terminology

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

1. Financial statement refers to a report of financial data, which has been audited by an independent auditing Organization.

2. Electricity delivery points are the sites where a power corporation delivers electric power to a power trading enterprise. They include electricity delivery points between the electricity transmission grids and the electricity distribution grids or between a power plant feeding 110kV lines and the electricity transmission grids of power corporations.

3. The operator of the national electricity system and market refers to the body that manages transactions in the electricity market and that directs and controls the generation, transmission and distribution of electric power through the national electricity system.

4. Organizations incurring the cost of electricity transmission are power corporations and direct buyers of electric power from the electricity transmission grids.

5. Direct buyers of electric power refer to major users of electric power, whose facilities connect directly with the electricity transmission grids.

6. Electricity transmission grid is a system that consists of power transmission lines, electrical substations and synchronized equipment for transmitting electric power from power plants to intake points of power corporations. The grids include transmission lines of 500/110kV electrical substations that belong to National Power Transmission Corporation.

7. The year to which electric power selling price applies commences on March 01 of that year and ends at the end of February of the immediately following year.

8. Year N means the period to which electric power selling price applies as of March 01 of year N to the end of February of the immediately following year.

9. Year N-1 means the year to which electric selling price applied prior to year N and in which the electricity transmission price for year N was determined.

10. Year N-2 means the year to which electric selling price had applied prior to year N-1.

11. Electricity transmission assets include the electricity transmission grids, buildings and ancillary equipment, under the ownership of National Power Transmission Corporation, for transmitting electric power.

12. Maximum total capacity of delivery (of an organization) means the highest total power delivered to an organization incurring the cost of electricity transmission at electricity delivery points from March 01 of year N to the end of February of the immediately following year.

Chapter 2.

METHOD FOR DETERMINING THE ELECTRICITY TRANSMISSION PRICE

Article 3. Principles of determination of the average electricity transmission price

1. The annual power transmission price comes into effect on nationwide scale notwithstanding power transmission distance and delivery points.

2. The average power transmission price is determined on annual basis with the aim of recovering valid costs to the full and gaining profit permissible to operate the electricity transmission grids of regulated quality and to gain financial ratios pertinent to the investment and development of electricity transmission grids.

3. The following formula shall determine the average electricity transmission price in year N () via the total allowed revenue of electricity transmission by National Power Transmission Corporation and the total amount of electric power delivered by National Power Transmission Corporation to organizations incurring the cost of electricity transmission:

Where:

: Total revenue of electricity transmission by National Power Transmission Corporation in year N (VND)

: Total forecasted amount of electric power delivered to organization i at all delivery points in year N (kWh)

n: Quantity of organizations incurring the cost of electricity transmission

Article 4. Method for determining total allowed annual revenue of power transmission

Total allowed revenue of power transmission in year N () consists of the allowed cost of capital (), the allowed operating and maintenance cost () and the factor adjusting the electricity transmission revenue for year N-2 (CL_N-2) as in the following formula:

 = + + CL_N-2

Where:

: Total allowed cost of capital of National Power Transmission Corporation for power transmission in year N (VND)

: Total allowed operating and maintenance cost of National Power Transmission Corporation for power transmission in year N (VND)

CL_N-2 : The variance concerning the costs and the revenues of electricity transmission in year N-2 that is an adjusting constituent of the total allowed revenue in year N (VND) and is determined according to Article 12 of this Circular.

Article 5. Method for determining total cost of capital

1. Total cost of capital for power transmission in year N () is determined as follows:

 =

Where:

: Total fixed asset depreciation cost in year N (VND)

: Total cost of interest on long-term loans and loan application fees, which is payable in year N and is spent on electricity transmission assets (VND)

LN_N: Allowed profit of electricity transmission in year N (VND)

2. Total fixed asset depreciation cost in year N () is determined according to the regulation on useful life and fix asset depreciation methodology in the Circular No. 203/2009/TT-BTC dated October 20, 2009 by the Ministry of Finance on guidelines for management, use and depreciation of fixed assets and subsequent guiding, amending and replacement documents.

For electricity transmission assets whose depreciation time does not correspond to that defined in the Circular No. 203/2009/TT-BTC National Power Transmission Corporation shall formulate the depreciation scheme for such assets and report to the Electricity Vietnam for review. Before such scheme is presented to and promulgated by the Ministry of Finance, National Power Transmission Corporation is held responsible for presenting the scheme to the Electricity Regulatory Authority for approval.

3. Total cost of interest on long-term loans and loan application fees, which is payable in year N (), is defined in credit agreements for acquisition of electricity transmission assets.

4. The allowed profit in year N (LN_N) is determined as follows:

LN_N = V_CSH,N x ROE_N

Where:

V_CSH,N : The average owner’s equity estimated until December 31 of year N-1 and the owner’s equity estimated until December 31 of year N (VND)

ROE_N: Return on equity of National Power Transmission Corporation (%), which sustains financial ratios pertinent to the investment and development of the electricity transmission grid, including the self-financing ratio (SFR) and the debt service coverage ratio (DSCR) to be augmented gradually to 25% and 1.5-fold accordingly

National Power Transmission Corporation shall formulate solution(s) and regulation(s) to manage the annual fluctuation of electricity transmission assets. Before such solutions and regulations are presented to and promulgated by the Electricity Regulatory Authority, they shall be presented to the Electricity Vietnam for approval.

Article 6. Method for determining total operating and maintenance cost

1. Total operating and maintenance cost for electricity transmission in year N () is determined as follows:

Where:

: Total cost of materials in year N (VND)

: Total cost of salary in year N (VND)

:Total cost of major repair in year N (VND)

: Total cost of outsourced services in year N (VND)

: Other pecuniary cost in year N (VND)

2. Method for determining total cost of materials

a) Total cost of materials in year () is the expenses of materials of power lines, electrical substations and transformers in year N. It consists of direct and indirect material expenses (i.e. experiment, operation and maintenance of power lines, electrical substations and transformers), as calculated via the following formula:

Where:

: Total cost of materials of power lines in year N (VND)

: Total cost of materials of electrical substations in year N (VND)

: Total cost of materials of transformers in year N (VND)

b) Total cost of materials of power lines in year N () is determined as follows:

Where:

L_d,i,h : Total length of power lines in category d, at voltage i, in topographic condition h in year N (km)

: Unit price of materials per kilometer of power lines in category d, at voltage i, in topographic condition h (VND/km)

d: Type of lines: Single-circuit overhead line (Đ) double-circuit overhead line (K), single-circuit underground cable (NĐ), double-circuit underground cable (NK)

i: Voltage: 110kV, 220kV, 500kV

h: Topographic indicator: lowland (ĐB), midland and mountainous area (TD), steep mountain and jungle (NC)

c) Total cost of materials of electrical substations in year N () is determined as follows:

Where:

M_{i, h}: Quantity of bays at voltage i, in topographic condition h in year N (bay)

: Unit price of materials of each bay at voltage i, in topographic condition h (VND/bay)

d) Total cost of materials of transformers in year N () is determined as follows:

Where:

S_{i, h}: Total capacity of transformers at voltage i, in topographic condition h in year N (MVA)

: Unit price of materials of each MVA transformer at voltage i, in topographic condition h (VND/MVA)

dd) The length of power lines, number of bays in an electrical substations and total capacity of transformers of various voltages, anticipated for year N, shall be determined according to the actual workload carried out until December 31 of year N-2 and the workload added in year N-1 (on the basis of the workload performed until the time of reporting and the additional workload anticipated until December 31 of year N-1) plus the further workload expected for year N;

e) The unit price of materials of power lines, bays in electrical substations and transformers shall consist of direct and indirect elements, of which the indirect element is expressed as a percentage of the direct element;

g) National Power Transmission Corporation shall be responsible for defining the unit price of materials and the cost limit ratio of indirect materials to direct ones with regard to power lines, bays and transformers of various voltages according to topographic conditions. Such price and ratio shall be presented to Electricity Vietnam for approval before being reported to and promulgated by the Electricity Regulatory Authority.

3. Method for determining the cost of salary

a) Total cost of salary of National Power Transmission Corporation in year N includes the total cost of salaries and salary-related expenses;

b) Total cost of salary shall be determined according to the Circular No. 15/2007/TT-BLDTBXH dated August 31, 2007 on guidelines for the implementation of the Government’s Decree No. 86/2007/ND-CP dated May 28, 2007 on the management of workforce and remuneration in state-owned single-member limited liability enterprises, other circulars that provide subsequent guidelines, amendments and replacement, and relevant regulations;

c) Salary-related expenses, e.g. premiums for health insurance, social insurance, unemployment insurance and trade union’s expenditure, shall be determined as per relevant laws.

4. Method for determining the total cost of major repair

a) Total cost of major repair of National Power Transmission Corporation in year N () is determined as follows:

Where:

: Total cost of major repair of transmission lines in year N (VND)

: Total cost of major repair of electrical substations in year N (VND)

: Total cost of major repair of transformers in year N (VND)

: Total cost of major repair of ancillary buildings in year N (VND)

The cost of major repair does not include the expense of overhaul and upgrade of fixed assets, which heighten the original cost of fixed assets.

b) Total cost of materials of power lines in year N () is determined as follows:

Where:

L_{d, i, h} : Total length of transmission lines in category d, at voltage i, in topographic condition h and under major repair(s) in year N (km)

: Unit cost of major repair per kilometer of power lines in category d, at voltage i, in topographic condition h (VND/km)

d: Type of lines: single-circuit overhead line (Đ) double-circuit overhead line (K), single-circuit underground cable (NĐ), double-circuit underground cable (NK)

i: Voltage: 110kV, 220kV, 500kV

h: Topographic indicator: lowland (ĐB), midland and mountainous area (TD), steep mountain and jungle (NC)

c) Total cost of major repair of electrical substations in year N () is determined as follows:

Where:

M_{i, h:} Quantity of bays at voltage i, in topographic condition h and under major repair in year N (bay)

: Unit cost of major repair for each bay at voltage i, in topographic condition h (VND/bay)

d) Total cost of major repair of transformers in year N () is determined as follows:

Where:

S_{i, h:} Total capacity of transformers at voltage i, in topographic condition h and under major repair in year N (MVA)

: Unit price of major repair for each MVA transformer at voltage i, in topographic condition h (VND/MVA)

dd) Total cost of major repair of ancillary buildings in year N () is determined as follows:

Where:

k: Cost limit ratio of major repair of ancillary buildings to total cost of major repair of power lines and electrical substations (including bays and transformers) (%)

e) National Power Transmission Corporation shall be responsible for: determining and present rated values and unit costs of major repair to the Electricity Vietnam for approval then to the Electricity Regulatory Authority for promulgation; formulating the list of annual major repairs to be verified by the Electricity Vietnam in order to determine the total cost of major repair in year N.

5. Method for determining total cost of outsourced services

a) Total cost of services outsourced in year N () consists of expenses for goods and services in demand, which are provided by external entities, e.g. electricity, water, telephone, telecommunications, newspaper, auditing advice, rented assets, non-life insurance and other services provided on a contract basis for management and operation of the electricity transmission grid in year N;

b) Total cost of outsourced services in year N shall be subject to the demands for external services anticipated for year N on the basis of audited actual expenses dispensed in year N-2 (via contracts for outsourced services and expenses thereof) and such expenses estimated for year N-1.

6. Method for determining other total pecuniary cost

a) Other total pecuniary cost in year N  includes expenses for: business trips, meetings, reception, training, purchase of reactive power, science research, innovative ideas, shift meals, guards, provisions against flood and storm, fire prevention, labor protection, work uniform, work hygiene, industrial and environmental sanitation, drinking water at work, material compensation for night shift and hazardous work, first aid for work accidents, medications against common ailments, workers’ physical rehabilitation, recruitment, losses recorded as costs, taxes, land rent, short-term loan interest payable in the year (including the interest on short-term loans to gain working capital necessary for electricity transmission activities), exchange rate variation regarding long-term loans due in the year and other monetary expenses in year N;

b) Other total pecuniary cost in year N shall be subject to the cost anticipated for year N on the basis of the audited actual cost dispensed in year N-2 and the cost estimated for year N-1.

Article 7. Method for determining the annual electricity transmission price for organizations incurring the cost of electricity transmission

1. The electricity transmission price () (VND/kWh) in year N for the organization i incurring the cost of electricity transmission shall be determined as follows:

Where:

TC_i­: Electricity transmission cost incurred by the organization i in year N (VND)

: Total forecasted amount of electric power delivered to organization i at all delivery points in year N.

2. Electricity transmission cost incurred by the organization i in year N (TC_i) shall be determined as follows:

Where:

TC_P,i: Electricity transmission cost factor by capacity (VND)

TC_A,i: Electricity transmission cost factor by electric power (VND)

DC_{i, N-2}: Total adjustment value of the electricity transmission cost incurred by the organization i in year (N-2) (VND)

3. The electricity transmission cost factors by capacity and by electric power shall be determined accordingly as follows:

Where:

: Total forecasted amount of maximum electric power delivered to organization i at all delivery points in year N (MW)

n: Quantity of organizations incurring the cost of electricity transmission.

α, β: The ratio of the factors by capacity and electric power to the electricity transmission cost, as defined by the Electricity Regulatory Authority on annual basis; as α + β = 1 and α = 0 in the year of 2011

4. Total adjustment value of the electricity transmission cost incurred by the organization i originates from the difference between the actual output delivered and maximum capacity of delivery with those forecasted for year N-2 (DC_i,N-2). This adjustment value is determined as follows:

Where:

: Total revenue of electricity transmission in year (N-2) (VND)

: Total forecasted amount of maximum electric power delivered to organization i at all delivery points fed by the transmission grid in year (N-2) (MW)

: Total actual amount of maximum electric power delivered to organization i at all delivery points fed by the transmission grid in year (N-2) (MW)

: Forecasted amount of electric power delivered to organization i in year (N-2) (MWh)

: Actual amount of electric power delivered to organization i in year (N-2) (MWh)

I_N-2: Average interest on 12-month time deposits in Vietnam Dong for corporate clients on December 31 of year (N-2) as defined by 4 commercial banks (Vietcombank, Vietinbank, BIDV and Agribank) plus 3%.

Article 8. Method for determining the monthly electricity transmission price for organizations incurring the cost of electricity transmission

Electricity transmission cost incurred by the organization i in month j (TC_ij) shall be determined as follows:

Where:

: Total actual amount of electric power delivered to organization i at delivery points in month j (kWh)

: The electricity transmission price in year N for organization i incurring the cost of electricity transmission (VND/kWh)

Chapter 3.

ADJUSTMENT OF REVENUE OF ELECTRICITY TRANSMISSION

Article 9. Principle for adjustment of revenue of electricity transmission

1. National Power Transmission Corporation shall be responsible for formulating and maintaining written records of expenses in order to detect differences in the cost and revenue in year N-2 then to adjust total allowed revenue of electricity transmission in year N.

2. The adjustment of the cost and revenue of electricity transmission shall only be permissible in these events:

a) Total actual revenue of National Power Transmission Corporation in year N-2 deviates from the total allowed revenue of electricity transmission previously approved;

b) The actual valid cost in year N-2 (as shown in the financial statement) deviates from the cost approved for year N-2, as shown in the electricity transmission price plan (including recorded depreciation cost, long-term loan interest, salary cost, major repair cost, outsourced service cost, currency exchange rate variation), except expenses defined in point c and point d of this Section;

c) Expense ensues as to recover from natural disasters and to settle force majeure in year N-2;

d) Expense ensues as to invest in reasonable assets for electricity transmission beyond the electricity transmission investment plan approved by competent governmental authorities for year N-2.

Article 10. Handling of ensuing expenses for recovery from natural disasters, settlement of force majeure and unplanned investment

1. If expense ensues as to recover from natural disasters or to settle force majeure, National Power Transmission Corporation, in 15 days upon the occurrence of such event, shall be responsible for reporting the event and expense estimate to the Electricity Vietnam for approval then to the Electricity Regulatory Authority.

2. If expense ensues as to invest in reasonable electricity transmission assets beyond the plan approved, National Power Transmission Corporation shall be responsible for documenting the amendment to the annual transmission grid expansion plan and reporting to the Electricity Vietnam for verification then to the Electricity Regulatory Authority for approval.

Article 11. Responsibility for recording and reporting differences in the cost and revenue of electricity transmission

National Power Transmission Corporation shall be responsible for maintaining written records of expenses and making annual reports (to be included in the application for approval of total revenue of electricity transmission) on the variation in the cost and revenue of electricity transmission (from March 01 of year N-2 to the end of February of year N-1). Such variation includes

1. Cost-related differences or expenses ensuing in year N-2, which necessitate the adjustment of the cost and revenue.

2. The differential amount related to the cost and revenue of year N-2 (CL_N-2), which are adjusted to total revenue of electricity transmission for year N.

3. The balance of the differential amount related to the cost and revenue of electricity transmission until the end of February of year N-1.

Article 12. Method for determining the differential amount related to the cost and revenue of electricity transmission

The differential amount related to the cost and revenue of electricity transmission of National Power Transmission Corporation in year N-2 , being adjusted to total revenue of electricity transmission in year N, is determined as follows:

Where:

: Total actual revenue of electricity transmission in year N-2 (as shown in the financial statement), whose formula is:

: Total revenue of electricity transmission approved in year N-2

∆C_N-2: Total difference between the valid actual cost and the approved cost in year N-2 (as per point b, section 2, Article 9 of this Circular)

SV_N-2: Total ensuing expense for recovery from natural disaster(s) and settlement of force majeure, total depreciation cost, loan interest, return on equity from reasonable investment(s) ensuing in year N-2 (as per point c and dd, section 2, Article 9 of this Circular).

I_N-1:_: Average interest on 12-month time deposits in Vietnam Dong for corporate clients on July 31 of year N-1 as defined by 4 commercial banks (Vietcombank, Vietinbank, BIDV and Agribank) plus 3%.

Chapter 4.

PENALTY FOR FAILURE TO MAINTAIN SERVICE QUALITY

Article 13. Principles of penalty for failure to maintain service quality

1. National Power Transmission Corporation shall incur a penalty for its failure to maintain the quality of the electricity transmission service if power outages related to transmission lines and transformers of the electricity transmission grid in a year exceed the defined limit of each voltage level, except for force majeure (natural disasters) or problems that not caused by National Power Transmission Corporation.

2. The penalty shall apply on annual basis by deducting from the welfare fund an amount equivalent to the total penalty for failure to maintain the quality of electricity transmission service and transferring the amount into the investment and development fund of National Power Transmission Corporation.

Article 14. Method for determining total penalty for failure to maintain service quality

1. Total annual penalty for National Power Transmission Corporation’s failure to maintain the quality of electricity transmission service (year N) R_N is determined as follows:

Where:

: The penalty for failure to maintain the electricity transmission service quality due to problems on transmission lines (VND)

: The penalty for failure to maintain the electricity transmission service quality due to transformers’ problems (VND)

L_i,N (L_{j, N}, L_k,N): Total length of 110kV (220kv, 500kV) transmission lines suffering outage upon problem i (j, k) (km)

S­_i,N (S_j,N­, S_k,N): Total installed power of high-tension transformers of 110kV (220kv, 500kV), which suffer outage upon problem i (j, k) (MVA)

t_i (t_j, t_k): Duration of the power outage on transmission lines or high-tension transformers of 110kV (220kv, 500kv) upon problem i (j, k) (minute)

n (m, l): Quantity of problems on transmission lines or high-tension transformers of 110kV (220kV, 500kV) in year N (from September 01 of year N-1 to August 31 of year N)

Rate of penalty for failure to maintain the quality of electricity transmission service due to power line outage in year N, which is charged per kilometer of 110kV transmission line per minute [VND/(km x minute)], is determined as follows:

= X₁₁₀ x G_{TT N}

Rate of penalty for failure to maintain the quality of electricity transmission service due to power line outage in year N, which is charged per kilometer of 220kV transmission line per minute [VND/(km x minute)], is determined as follows:

= X₂₂₀ x G_{TT N}

Rate of penalty for failure to maintain the quality of electricity transmission service due to power line outage in year N, which is charged per kilometer of 500kV transmission line per minute [VND/(km x minute)], is determined as follows:

= X₅₀₀ x G_{TT N}

Rate of penalty for failure to maintain the quality of electricity transmission service due to transformer outage in year N, which is charged per MVA of the high-tension 110kV transformer's power per minute [VND/(MVA x minute)], is determined as follows:

= Y₁₁₀ x G_{TT N}

Rate of penalty for failure to maintain the quality of electricity transmission service due to transformer outage in year N, which is charged per MVA of the high-tension 220kV transformer's power per minute [VND/(MVA x minute)], is determined as follows:

= Y₂₂₀ x G_{TT N}

Rate of penalty for failure to maintain the quality of electricity transmission service due to transformer outage in year N, which is charged per MVA of the high-tension 500kV transformer's power per minute [VND/(MVA x minute)], is determined as follows:

= Y₅₀₀ x G_{TT N}

X₁₁₀: Rate of penalty for failure to maintain the quality of electricity transmission service due to 110kV transmission line outage (1/(km x minute)]

X₂₂₀: Rate of penalty for failure to maintain the quality of electricity transmission service due to 220kV transmission line outage (1/(km x minute)]

X₅₀₀: Rate of penalty for failure to maintain the quality of electricity transmission service due to 500kV transmission line outage (1/(km x minute)]

Y₁₁₀: Rate of penalty for failure to maintain the quality of electricity transmission service due to 110kV transmission transformer outage (1/(km x minute)]

Y₂₂₀: Rate of penalty for failure to maintain the quality of electricity transmission service due to 220kV transmission transformer outage (1/(km x minute)]

Y₅₀₀: Rate of penalty for failure to maintain the quality of electricity transmission service due to 500kV transmission transformer outage (1/(km x minute)]

A (B, C): The cap of penalty for 110kV (220k, 500kV) power line outage

D (E, G): The cap of penalty for 110kV (220k, 500kV) transmission transformer outage

2. Total penalty for National Power Transmission Corporation's failure to maintain the quality of electricity transmission service in year N (R_N) shall be at most 0.1% of total allowed revenue of electricity transmission in year N (0,1% x ).

3. A problem on transmission lines or transformers, which causes failure to maintain the quality of electricity transmission service, shall be punishable if the duration of such problem is one minute or longer. The duration of outage on transmission lines and transformers shall be rounded to minute.

Article 15. Procedure for amercing the failure to maintain service quality

1. By October 01 every year (year N), National Power Transmission Corporation must summarize and report to the operator of the national electricity system and market about the transmission line problems (outage time t_i, failed line length L_i,N for each problem), transmission transformer problems (outage time t_i, total installed power of the failed transformer S_i,N for each problem) on the transmission grid from September 01 of year N-1 to August 31 inclusive of year N.

2. By November 01 every year (year N), the operator of the national electricity system and market shall be responsible for verifying and endorsing the summary report on problems on transmission lines and transformers from September 01 of year N-1 to August 31 inclusive of year N, then for transferring the report to the Electricity Regulatory Authority and a copy thereof to the National Power Transmission Corporation in order to define the penalty for failure to maintain the quality of electricity transmission service in year N.

3. By December 01 every year (year N), National Power Transmission Corporation shall be responsible for reporting to the Electricity Regulatory Authority about explanations of problems on transmission lines and transformers from September 01 of year N-1 to August 31 inclusive of year N. Moreover, the former shall be responsible for calculating and presenting the penalty for failure to maintain the quality of electricity transmission service in year N to the Electricity Vietnam for verification then to the Electricity Regulatory Authority for approval.

Chapter 5.

PROCEDURE FOR ASSESSMENT, APPROVAL AND PAYMENT OF ELECTRICITY TRANSMISSION PRICE

Article 16. Procedure for verification and approval of total revenue of electricity transmission

1. By September 15 every year (year N-1), National Power Transmission Corporation shall assess in writing the total revenue of electricity transmission for the year, to which the price applies, (year N) from March 01 of year N to February 28 of year N+1. The assessment documents shall be presented to the Electricity Vietnam for verification then to the Electricity Regulatory Authority for appraisal and approval in writing. If the said documents do not conform to Article 17 of this Circular, National Power Transmission Corporation shall be responsible for supplementing them in five (05) days upon request by the Electricity Regulatory Authority.

Electricity Regulatory Authority can employ consultant(s), if deemed necessary, to appraise the documents on total revenue of electricity transmission from National Power Transmission Corporation.

2. By October 10 every year (year N-1), Electricity Regulatory Authority shall approve in writing the total revenue of electricity transmission of National Power Transmission Corporation in year N to proceed to the verification of the electricity transmission price.

Article 17. Documents for appraisal of total revenue of electricity transmission

The documents for appraisal of total revenue of electricity transmission of National Power Transmission Corporation per year (year N) include:

1. The letter of request for appraisal of total revenue of electricity transmission of National Power Transmission Corporation in year N.

2. Explanation and resultant figures of total revenue of electricity transmission in year N in table format, including:

a) Analysis and evaluation of the realization of electricity production assignments, transmission loss ratio, rate of problems on power lines and transformers of different voltages, revenue and cost recorded until August 31 and estimated to the end of year N-1; analysis and evaluation of the accomplishment of profits, equity, financial indicators such as return on equity, equity structure and loan, investment ratio, debt repayment ratio until June 30 and estimated to December 31 inclusive of year N-1 and to the end of year N-1 on the basis of the data recorded until August 31 of year N-1;

b) Explanation and resultant figures of total allowed cost of capital of National Power Transmission Corporation  in year N, including:

- Total depreciation cost in year N: the general table on fixed asset depreciation in year N and specific tables on basic depreciation of each fixed asset in year N;

- Total cost of interest payable in year N on long-term loans for transmission facilities: a tablet containing defined data of loans repayable in year N;

- Owner’s equity estimated at the end of year N-1 and anticipated at the end of year N: notes and specified figures of fluctuations in the owner's equity in year N-1 and year N in table format;

- Profit anticipated in year N, return on equity, self-investment ratio, debt repayment ratio.

c) Explanation and resultant figures of total allowed operating cost of National Power Transmission Corporation  in year N, including:

- Total cost of materials in year N: notes and resultant figures, in table format, of the cost of materials spent in year N-2, estimated for year N-1 and anticipated for year N in accordance with total length of power lines of different types, total capacity of electrical substations, number of electrical substation bays by voltage and topographic condition;

- Total cost of salary in year N: explanation and resultant figures of the salary cost:

- Total cost of major repairs in year N: explanation and resultant figures, in table format, of the cost of major repairs in year N as per section 4, Article 6 of this Circular;

- Total cost of outsourcing services in year N: explanation and resultant figures of the cost of outsourced services according to utilities and services provided in year N-2, estimated for year N-1 and anticipated for year N;

- Other pecuniary cost in year N: explanation and resultant figures of other pecuniary cost spent in year N-2, estimated for year N-1 and anticipated for year N.

d) Explanation and resultant figures of differences in the cost and revenue of electricity transmission in year N-2; fluctuations in differential amounts related to the cost and revenue of electricity transmission;

dd) Explanation and resultant figures of total allowed revenue of electricity transmission in year N.

3. These documents shall be enclosed:

a) The list of investment projects to be operated in year N-1 and to be built in year N in conformity to the national electricity development plan and the annual transmission grid expansion plan of National Power Transmission Corporation, which have been approved;

b) The summary of fluctuations in facilities and fixed assets for electricity transmission on monthly basis, as estimated to the end of year N-1 and planned for year N. Specific details of power grid facilities and summarized value must be shown with regard to assets not yet operated and to other assets, accordingly;

c) The general table indicating fluctuations in permanent and official workers as shown in the payrolls of the Corporation and related units, as estimated to the end of year N-1 and planned for year N;

d) Summary of reserve facilities available and to be added, as estimated to the end of year N-1 and year N;

dd) The list of major repairs of fixed assets in year N-1 and expectedly in year N;

e) The financial statement of year N-2: balance sheet, profit and loss report, cash flow report, notes;

g) The defined limit of expenses as stated in the documents approved by competent authorities.

Article 18. Procedure for determining the electricity transmission price

1. By April 01 every year (year N-1), the organization incurring the cost of electricity transmission shall be responsible for informing National Power Transmission Corporation of maximum total capacity of delivery and actual electric power delivered at each delivery point in year N-2 for the calculation of the adjustment factor DC­_N-2 in year N-2.

2. By August 01 every year (year N-1), the organization incurring the cost of electricity transmission shall be responsible for forecasting the electric power to be delivered and maximum total capacity of delivery at all delivery points in year N and notifying the data to the operator of the national electricity system and market. The operator of the national electricity system and market shall be responsible for summarizing and calculating the forecasted electric power to be delivered and maximum total capacity of delivery for each organization incurring the cost of electricity transmission in accordance with the load required by electricity system in year N.

If the organization incurring the cost of electricity transmission does not send its data forecast, the operator of the national electricity system and market can use figures of year N-2 to determine the electricity transmission price for year N.

3. By October 05 every year (year N-1), the operator of the national electricity system and market shall be responsible for sending the forecasted electric power to be delivered and maximum total capacity of delivery in year N for each organization incurring the electricity transmission cost to National Power Transmission Corporation for the latter to calculate the price and cost of electricity transmission in year N for each organization thereof.

4. By October 15 every year (year N-1), National Power Transmission Corporation shall be responsible for determining the electricity transmission price for year N (g_TTi) for each organization incurring the electricity transmission cost (according to the approved revenue of electricity transmission for year N and the adjustment factor of year N-2). It shall present the resultant figures to the Electricity Vietnam for verification then to the Electricity Regulatory Authority for approval. If the documents do not conform to Article 19 of this Circular, National Power Transmission Corporation shall be responsible for supplementing them in five (05) days upon request by the Electricity Regulatory Authority.

Article 19. Documents for approval of the electricity transmission price

1. The letter of request for approval of the electricity transmission price

2. Explanation and resultant figures, in table format, of the electricity transmission cost that each organization incurring such cost shall pay, as follows:

a) The electricity transmission cost factor by capacity and electric power;

b) Maximum total capacity of delivery and total forecasted amount of electric power delivered to each organization incurring the electricity transmission cost at delivery points in year N;

c) Total adjustment value of the electricity transmission cost on the organization incurring such cost in year N-2 (specific data in table format)

3. Documents enclosed:

a) The forecasted electric power to be delivered and maximum total capacity for each organization incurring the cost of electricity transmission in year N, as determined by the operator of the national electricity system and market;

b) Maximum total capacity and actual electric power delivered at each delivery point in year N-2 for each organization incurring the electricity transmission cost.

Article 20. Payment of the electricity transmission cost

1. Power trading enterprises shall pay the electricity transmission cost to National Power Transmission Corporation. Organizations incurring the electricity transmission cost shall pay the cost of electricity transmission to power trading enterprises.

2. By the 10^th of each month (month T), National Power Transmission shall be responsible for sending to power trading enterprises the payment documents on the previous month's electricity transmission cost (month T-1) for each organization incurring such cost and total electricity transmission cost of month T-1 for all organizations.

If the payment documents contain errors or insufficient contents, power trading enterprises must inform National Power Transmission in writing in ten (10) days upon the former's receipt of such documents for the latter to amend them.

3. By the 15^th of each month (month T), power trading enterprises shall be responsible for advancing 50% of the payment of month T-1’s electricity transmission cost, as defined in the payment documents of month T-1, to National Power Transmission Corporation.

4. By the 20^th of each month (month T), National Power Transmission Corporation shall send to power trading enterprises the invoice for the payment of total electricity transmission cost of month T-1 (enclosed with the complete payment documents, if amended).

5. By the 05^th of month T+1, power trading enterprises must pay the remaining amount of month T-1's cost of electricity transmission to National Power Transmission Corporation according to the said invoice.

If the invoiced amount differs from the figure announced by National Power Transmission Corporation, power trading enterprises shall pay the invoiced amount. The payment of the differential amount shall be subject to the involved entities’ written agreement.

Chapter 6.

IMPLEMENTATION

Article 21. Implementation

1. Electricity Regulatory Authority shall be responsible for guiding and inspecting the implementation of this Circular and settle related disputes that arise. If the Prime Minister revises the time of adjustment of the annual retail electricity price, Electricity Regulatory Authority shall be responsible for notifying organizations involved of the revised time, data acquisition schedule and electricity transmission price calculation schedule.

2. Electricity Vietnam shall be responsible for instructing National Power Transmission Corporation to determine the total revenue and price of electricity transmission on annual basis. Electricity Vietnam shall verify the process of annual electricity transmission pricing according to this Circular and direct power trading enterprises and National Power Transmission Corporation to engage in electricity transmission service contracts.

3. National Power Transmission Corporation shall be responsible for:

a) Determining and presenting the annual total revenue and price of electricity transmission to the Electricity Vietnam for its verification then to the Electricity Regulatory Authority for approval;

b) Formulating unit prices, cost limit and coefficients, limit of penalty for failure to maintain the quality of electricity transmission service, summary of problems on transmission lines and transformers of 110kV, 220kV and 500kV according to this Circular. Such data shall be sent to the Electricity Vietnam for verification then to Electricity Regulatory Authority for promulgation.

Article 22. Effect

1. This Circular comes into force as of June 01, 2010.

2. Head of Electricity Regulatory Authority, General Director of Electricity Vietnam, General Director of National Power Transmission Corporation, Director of National Load Dispatch Center, Directors of power trading enterprises, Directors of power corporations, organizations incurring the cost of electricity transmission and entities involved shall be responsible for implementing this Circular.