Decree No. 18/2025/ND-CP dated February 08, 2025 on elaborating the Law on electricity relating to electricity trade and electricity supply capability

DECREE

ELABORATING THE LAW ON ELECTRICITY RELATING TO ELECTRICITY TRADE AND ELECTRICITY SUPPLY CAPABILITY

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on amendment to the Law on Government Organization and the Law on Local Government Organization dated November 22, 2019;

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

At request of the Minister of Industry and Trade;

The Government promulgates Decree elaborating the Law on Electricity relating to electricity trade and electricity supply capability.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Decree elaborates the Law on Electricity, including:

1. Clause 6 Article 44 pertaining to assurance means, electricity quality of the Buyer under power purchase agreement (PPA) for non-domestic purposes; requirements for concluding PPA for domestic purposes.

2. Clause 7 Article 48 pertaining to recording to electricity readings.

3. Clause 5 Article 53 pertaining to emergency situations severely threatening electricity supply capability.

Article 2. Regulated entities

This Decree applies to agencies, organizations, individuals engaged in electricity operations and electricity use in Vietnam.

Chapter II

ASSURANCE MEASURES, ELECTRICITY QUALITY, CONDITIONS FOR CONCLUDING PPA FOR DOMESTIC PURPOSES, RECORDING OF ELECTRICITY READINGS

Article 3. PPA performance security

1. Electricity buyer (hereinafter referred to as “the Buyer”) that is electricity users with average electricity consumption of 1.000.000 kWh/month or more according to registration under PPA has the responsibility to adopt contract performance security prior to effective date of PPA. Where average electricity consumption registered under PPA is lower than 1.000.000 kWh/month while electricity consumption in practice of the latest 12 months is 1.000.000 kWh/month or higher, the Buyer has the responsibility to cooperate with the Seller in amending PPA to include contract performance security and adopt contract performance security prior to effective date of contract amendments. On an annual basis, the Seller and the Buyer shall negotiate value of contract performance security in accordance with average electricity consumption of the latest 12 months.

2. Value of contract performance security shall be negotiated by the Buyer and the Seller, equal to 10 to 15 days’ worth of electricity payment, and determined on the basis of average monthly electricity consumption registered under PPA or average practical electricity consumption in the latest 12 months and electricity prices of off-peak hour in effect.

3. Means, forms, and effectiveness of security, rights, obligations in contract performance security shall be negotiated by the parties in detail under PPA. It is recommended that contract performance security is implemented via commercial institutions.

4. Regulations on PPA performance security does not apply to cases where electricity users provide electricity for headquarters of state authorities, public service providers, armed forces, political organizations, socio-political organizations.

Article 4. Responsibility to ensure electricity quality of the Buyer that purchases electricity for non-domestic purposes

1. The Buyer has the responsibility to ensure that electrical appliances that they employ satisfy electricity quality requirements in accordance with standards on electricity engineering promulgated by the Minister of Industry and Trade.

2. Where the Buyer purchases electricity for manufacturing and/or business operations with separate electrical stations or the highest use capacity according to 3 consecutive electricity reading cycles of 40 kW or higher, the Buyer has the responsibility to:

a) register load profile and technology technical characteristics of electrical appliances to the Seller;

b) ensure power factor cosφ ≥ 0,9 at installation locations of electricity metering devices under the condition that electrical system satisfies electricity quality in accordance with regulations of the Minister of Industry and Trade. Where power factor cosφ < 0,9, the Buyer shall be required to purchase additional reactive power in accordance with Article 5 hereof;

c) comply with technical regulations on harmonic, voltage oscillation, voltage flicker in accordance with regulations on electrical transmission system, electrical distribution system, and electrical metering system promulgated by the Minister of Industry and Trade.

3. Where the Buyer is capable of feeding reactive power to electrical system and the Seller wishes to purchase reactive power, the parties may negotiate for sale and purchase of reactive power via written contracts.

4. Where the Buyer imposes electricity quality requirements higher than those imposed by the Ministry of Industry and Trade, the Buyer and the Seller can negotiate and specify electricity quality requirements under PPA.

Article 5. Sale and purchase of reactive power

1. Where the Buyer purchases electricity for manufacturing and/or business operations with separate electrical stations or the highest use capacity according to PPA of 40 kW or higher and power factor of cosφ < 0,9, the Buyer shall be required to purchase reactive power. Methods for determining cosφ shall be specified under Clause 2 of this Article.

Where the highest use capacity of the Buyer registered under PPA is less than 40 kW while in practice is at least 40 kW according to 3 consecutive electricity reading cycles, the Buyer shall be required to purchase reactive power in the cycle that follows the 3 consecutive electricity reading cycles. The Buyer has the responsibility to re-negotiate PPA with the Seller in order to stay in line with Clause 2 Article 4 hereof.

2. Power factor cosφ for determining reactive power purchase of the Buyer shall be determined on the basis of electricity meter reading in a meter reading cycle according to section 1 of Appendix attached hereto.

3. Where the Buyer signs one PPA for multiple meters at one location for electricity provided by a single line, real power is the sum of apparent electricity of all meters while reactive power is the sum of reactive electricity of all meters.

4. Where the Buyer uses electricity for other purposes in addition to manufacturing and business operations, power factor cosφ shall be determined as follows:

a) Where a separate meter is installed to measure electricity used in manufacturing and business operations, only the reactive power of electricity used in manufacturing and business operations shall be purchased;

b) Where no separate meter is installed to measure electricity used in manufacturing and business operations other than a general meter, the Buyer shall be required to purchase reactive power for electricity used in manufacturing and business operations where power factor cosφ < 0,9. In this case, electricity used in manufacturing and business operation shall be determined on the basis of electrical production, use capacity, and hours at which electrical appliances are used for other purposes in accordance with negotiations of the parties under PPA.

5. The Buyer shall pay the Seller reactive power charge to compensate for additional costs that arise as a result of the Buyer’s excessive use of reactive power relative to the limit calculated in accordance with formula provided in section 2 of Appendix attached hereto.

6. The Buyer shall incur reactive power charge at the same time as real power purchase. Reactive power charge debt shall be settled in the same manner as real power purchase debt.

7. Where the Seller fails to guarantee electricity quality in accordance with regulations of the Ministry of Industry and Trade, the Buyer shall not be required to purchase reactive power if power factor cosφ < 0,9.

Article 6. Requirements for concluding PPA for domestic purposes

1. In order to request conclusion of PPAs for domestic purposes, organizations and individuals shall satisfy requirements below:

a) Entities requesting contract conclusion affiliated to the Buyer are legal representatives or authorized representatives of the Buyer;

b) Entities requesting contract conclusion affiliated to the Seller are legal representatives or authorized representatives of electricity retailers that satisfy requirements of the Buyer;

c) Entities engaged in contract conclusion shall satisfy conditions at which civil transactions take effect in accordance with the Civil Code. In case of incapacitated individuals, legal representatives of the incapacitated individuals shall engage in contract conclusion;

d) Where the Buyer consists of multiple households sharing electricity under 1 PPA, entities concluding PPA shall be representatives of these households and authorized by the households in writing. The PPA must specify number of sharing households (with attached list) and applicable electricity price in accordance with electricity laws. Authorization shall conform to civil laws;

dd) Where the Buyer is a tenant for residential purposes, entity concluding PPA shall be house owner or the tenant if he/she is authorized by the house owner in writing. In which, house owner underwrites to pay electricity bill in case authorized tenant fails to pay electricity bill;

e) Where the Buyer is a household, only 1 PPA shall be concluded.

2. The Buyer shall file request for conclusion of PPA for domestic purposes in writing or data message of equal value as physical document as per the law; Request for conclusion of PPA shall consist of:

a) Written request for conclusion of PPA for domestic purposes;

b) Personal identification number of legal representatives or authorized representatives of the Buyer according to National population database. Where national database does not contain personal identification number, the identification number can be found via copies of 9-digit ID cards, 12-digit ID cards, written confirmation of residence information of representatives of the Buyer which contains residence information of households at location of electricity purchase or: Certificate of house ownership; certificate of land use right (land with built house); decision on house section; house purchase agreement; rent contract with at least 1 year of contract term, or other documents proving right to ownership, management, use of electricity purchase location with at least 1 year of term.

3. The Seller shall conclude PPA and supply the Buyer with electricity within 7 working days from the date on which all parties satisfy requirements under Clause 1 and Clause 2 of this Article.

Article 7. Recording of electricity meter reading

1. Regarding electricity sale and purchase for domestic purposes, the Seller shall record electricity meter reading once every month on a day designated by the parties under PPA except for force majeure that poses safety risks for employees specified under PPA. Electricity meter reading may be recorded 1 day before or after the designated day or on a day agreed upon under PPA.

2. Regarding the sale and purchase of electricity for non-domestic purposes, the Seller and the Buyer may negotiate the number of times in which electricity meter reading is recorded in a month. Where the parties fail to reach an agreement, the recording of electricity meter reading shall be decided on the basis of average electricity consumption registered under PPA:

a) Less than 50.000 kWh/month, electricity meter reading shall be recorded once per month;

b) From 50.000 to 100.000 kWh/month, electricity meter reading shall be recorded twice per month;

c) More than 100.000 kWh/month, electricity meter reading shall be recorded three times per month.

3. Where average electricity consumption in practice of the Seller for non-domestic purposes in the latest 3 months is greater or lower than electricity consumption thresholds corresponding to number of times in which electricity meter reading is recorded in a month under Point a, Point b, and Point c Clause 2 of this Article, the Seller and the Buyer may negotiate about adjustment to the number of times in which electricity meter reading is recorded in a month.

4. Where the Seller uses less than 15 kWh/month, metering cycle shall be discussed by the parties.

5. In respect of electricity wholesale, recording of electricity meter reading shall be negotiated by the parties in PPA.

6. The Seller has the responsibility to ensure accuracy of electricity meter readings that they have recorded.

Chapter III

EMERGENCY SITUATIONS SEVERELY THREATENING ELECTRICITY SUPPLY CAPABILITY

Article 8. Emergency situations severely threatening electricity supply capability

1. Presence or risk of imbalance between electricity sources and load that leads to reduction or disconnection of electricity supply defined by National Load Dispatch Unit under electrical system operating plans.

2. Presence or risk of electricity shortfall that leads to reduction or disconnection of electricity supply defined by National Load Dispatch Unit under electrical system operating plans.

3. Situations that cause power outage, failure of electricity transmission system, irregular spike of load demands causing imbalance between electricity sources and load.

Chapter IV

ENTRY INTO FORCE

Article 9. Entry into force

1. This Decree comes into force from the date of signing.

2. Regulations pertaining to PPA for domestic purposes under Article 11 of Decree No. 137/2013/ND-CP amended by Article 8 of Decree No. 104/2022/ND-CP and regulations pertaining to PPA performance security, electricity quality, recording of electricity meter reading under Article 12, Article 15, and Article 17 of Decree No. 137/2013/ND-CP shall expire from the effective date hereof.

3. PPAs that have been signed before the effective date hereof shall be implemented in accordance with terms thereof. Customers who have implemented contract performance security in accordance with Decree No. 137/2013/ND-CP and fall under the case detailed in Clause 4 Article 3 hereof have the right to request the Seller to amend PPA in accordance with this Decree./.

APPENDIX

FORMULA FOR DETERMINING POWER FACTOR COSφ AND REACTIVE POWER CHARGE
(Attached to Decree No. 18/2025/ND-CP dated February 8, 2025 of the Government)

1. Power factor cosφ is determined using the formula below:

Where:

A_p: Real power during metering cycle (kWh);

A_q: Reactive power during metering cycle that is the reactive power used by electrical appliances in the interval between two recordings of meter reading (kVArh).

2. Reactive power charge is determined using the formula below:

Where:

T_q = T_p x k%

T_q: Reactive power charge (VAT not included);

T_p: Real power charge (VAT not included);

k: Coefficient of cost compensation as a result of the Seller’s electricity consumption exceeding the regulated reactive power capacity (%). Coefficient k is determined as follows: