Circular No. 14/2025/TT-BCT dated February 01, 2025 on methods for formulation, documents and procedures for approval of electricity transmission price

CIRCULAR

METHODS FOR FORMULATION, DOCUMENTS AND PROCEDURES FOR APPROVAL OF ELECTRICITY TRANSMISSION PRICE

Pursuant to Law on Electricity dated November 31, 2024;

Pursuant to Government’s Decree No. 96/2022/ND-CP dated November 29, 2022 defining functions, tasks, powers and organizational structure of the Ministry of Industry and Trade of Vietnam; Government’s Decree No. 105/2024/ND-CP dated August 01, 2024 on amendments to Decree No. 96/2022/ND-CP and Decree No. 26/2018/ND-CP dated February 28, 2018 on Charter of organization and operation of EVN; 

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

The Minister of Industry and Trade promulgates Circular on methods for formulation, documents and procedures for approval of electricity transmission price.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and regulated entities

1. This Circular provides guidelines on methods for formulating electricity transmission price, documents and procedures for approving electricity transmission price; methods for guiding and determining price for transmission grids invested in and built by non-State economic sectors in accordance with points a and b Clause 6 Article 51 of the Law on Electricity No. 61/2024/QH15.

2. This Circular shall apply to Vietnam Electricity (EVN), electricity transmission units, electricity traders, Power Corporation, and customers who directly buy electricity from transmission system.

Article 2. Interpretation of terms

For the purposes of this Circular, the terms below shall be construed as follows:

1. Electricity authority refers to a unit affiliated to the Ministry of Industry and Trade which is assigned functions, tasks, and powers related to electricity management in accordance with regulations.

2. CPI refers to the consumer price index provided by central statistics authority.

3. Electricity delivery point refers to a connection point between electricity transmission units or with Power Corporation or with customers who directly buy electricity from transmission system and are equipped with an electricity metering system as regulated.

4. Electricity transmission cost payers refer to EVN, electricity traders, Power Corporation and customers who directly buy electricity from transmission system.

5. Electricity transmission unit refers to any electric unit which is granted the electricity license and responsible for managing and operating the national transmission grid, including: National Power Transmission Corporation and other electricity transmission units belonging to non-State economic sectors which invest in transmission grids.

6. Transmission grid user refers to any organization or individual possessing electrical equipment, electrical grids to connect to transmission grids to use electrical transmission services, including: EVN, Power Corporation and customers who directly buy electricity from transmission system.

7. Year N refers to the Gregorian calendar year from January 1 to December 31 of the year Where the price and price bracket is applicable.

8. Year N-1 refers to the Gregorian calendar year immediately preceding Year N.

9. Year N-2 refers to the Gregorian calendar year immediately preceding Year N-1.

10. Electricity transmission assets  include transmission grids, construction works, and other auxiliary equipment used for electricity transmission and owned by electricity transmission units.

11. Power Corporation refers to the member Power Corporation of EVN, including: Power Corporation refers to the member Power Corporation of EVN, including Northern Power Corporation, Southern Power Corporation, Central Power Corporation, Hanoi Power Corporation, and Ho Chi Minh City Power Corporation.

Chapter II

METHODS FOR DETERMINING ELECTRICITY TRANSMISSION PRICE

Article 3. Rules and methods for determining electricity transmission price

1. Electricity transmission price shall be determined annually on the basis of reasonable and legitimate costs and reasonable profit margin for the electricity transmission operation of electricity transmission units.

2. Electricity transmission price of year N  of each electricity transmission unit shall be determined based on total permissible electricity transmission revenues in year N of Electricity transmission units and total generation output expected in year N, using the formula below:

Where:

a) : Total permissible electricity transmission revenues in year N of Electricity transmission units (VND), which shall be determined in accordance with Article 4 of this Circular;

b) : Total generation output expected in year N (kWh), which shall be determined as follows:

b1) National Power Transmission Corporation: Total electricity transmission output expected at the delivery point with Power Corporation or with customers who directly buy electricity from transmission system;

b2) Other electricity transmission units: Total electricity transmission output expected through the transmission grid owned by the unit at electricity delivery points with electricity transmission units or Power Corporation or customers who directly buy electricity from transmission system;

b3) The determination of electricity delivered at electricity delivery points shall be carried out in accordance with the regulations on electricity metering.

3. Electricity transmission price shall be revised according to the actual changes of input parameters, including: foreign exchange rates, interest rates, electricity transmission output, fixed asset depreciation costs, taxes, fees, other payments to the state budget, or in case of accidents, crisis, force majeure events as regulated by the laws on state of emergencies and relevant regulations causing changes in electricity transmission costs.

When the electricity transmission price is updated based on the actual changes of input parameters mentioned above (other parameters remain unchanged), or in case of accidents, crisis, force majeure events causing changes of ±1% or more compared to the approved electricity transmission price of the year, the electricity transmission price shall be considered and adjusted following the procedures specified in Article 10 of this Circular.

Article 4. Methods for determining total electricity transmission output annually

Total permissible electricity transmission revenues in year N  , which includes permissible capital costs , permissible operation and maintenance costs , permissible profit (LN_N) and adjustments to revenue in Year N  , shall be determined using the formula below:

Where:

1.  : Total permissible electricity transmission capital cost in year N of Electricity transmission units (VND), determined in accordance with Article 6 of this Circular;

2.  : Total permissible operation and maintenance costs in year N of Electricity transmission units (VND), determined in accordance with Article 7 of this Circular;

3. LN_N: Total permissible profits in year N of electricity transmission units (VND), determined in accordance with Article 5 of this Circular;

4.  : adjustments to revenue in Year N including expected deposit interests in Year N of electricity transmission units (based on deposit interests in year N), expected income from the liquidation and sale of fixed assets, materials and equipment in year N (based on the liquidation and sale plan of fixed assets, materials and equipment in year N).

Article 5. Methods for determining permissible profit

The expected permissible profit in year N (LN_N) of electricity transmission units shall be determined using the formula below:

Where:

1.  : equity capital of electricity transmission units as of June 30 of year N-1 (VND), where the equity capital of the National Power Transmission Corporation is state capital invested by EVN for electricity generation and business operations according to the financial report of the second quarter of year N-1, equity capital of other electricity transmission units is capital formed from the investment in electricity transmission assets according to the regulations of relevant laws;

2. ROE_N : Pre-tax interest rate on equity capital in year N applied to electricity transmission units (%), determined in accordance with Clause 1 Article 3 of this Circular, without exceeding the pre-tax interest rate as specified in the Government’s Decree on the mechanism and time for revision of average retail electricity prices.

Article 6. Methods for determining total permissible capital costs for electricity transmission

1. Total permissible capital costs for electricity transmission in year N  shall be determined using the formula below:

Where:

a)  : Total expected costs of depreciation of fixed assets in year N (VND)

b) :  Total expected financing costs including short-term and long-term interests, bonds, financial leases, and loan-related fees payable in Year N for electricity transmission assets (VND)

c) : expected foreign exchange rate differences resulting from repaying foreign currency loans in year N (VND)

d) : expected revaluation of exchange rate in year N (VND);

dd ) : expected allocation in year N of the unrealized exchange rate loss from previous years.

2. Total depreciation costs of fixed assets in year N () shall be determined based on the value of existing fixed assets and projected assets to be put into operation in Year N, following the regulations on the management, utilization, and depreciation of fixed assets issued by the Ministry of Finance or other competent authorities.

3. Total expected financing costs in year N  shall be determined based on the existing credit agreements, financial lease contracts, and projected loans to serve electricity transmission in year N. The floating interest rate of loans shall be estimated based on loan agreements, documents, dossiers, and proposals from credit institutions and banks, which should not exceed the corresponding foreign and domestic currency interest rates as follows:

a) The interest rate of capital borrowed in foreign currency shall be determined using 180-day average SOFR (Secured Overnight Financing Rate) of 36 consecutive months prior to the establishment of price bracket announced by Fed (website: www.newyorkfed.org) plus an average annual loan arrangement fee charged by the bank (3% per year)

b) The interest rate for capital borrowed in VND currency shall be determined by the average interest rate for 12-month deposits in VND, applicable to individual customers, of 05 consecutive years prior to the establishment of annual price bracket determined on September 30th of each year and announced by 04 commercial banks (Vietnam Bank for Foreign Trade, Joint Stock Commercial Bank for Industry and Trade of Vietnam, Joint Stock Commercial Bank for Investment and Development of Vietnam, Agriculture and Rural Development Bank of Vietnam, or their lawful successors) plus the average annual loan arrangement fee charged by the bank, which is 3% per year.

4. The exchange rate difference expected to arise from repayment of foreign currency loans in year N  shall be determined according to regulations on finance and accounting.

5. The exchange rate difference expected to arise from revaluation in year N  shall be determined according to regulations on finance and accounting.

6. Expected allocation in year N of the unrealized exchange rate loss from previous years  shall be determined according regulations promulgated by competent authorities.

Article 7. Methods for determining total permissible operation and maintenance costs for electricity transmission

1. Total permissible operation and maintenance costs for electricity transmission in year N  shall be determined using the formula below:

Where:

a) : total material costs expected in year N (VND);

b) :  total personnel costs expected in year N (VND);

c) : total major repair costs expected in year N (VND);

d) : total outsourced service costs expected in year N (VND);

dd) : total other monetary costs expected in year N (VND).

2. Methods for determining material costs:

a) Total material costs expected in year N  include material costs within norms and material costs in case of incidents. To be specific:

a1) Material costs within norms: Costs of engine oil, lubricants, grease, materials, tools, equipment using directly and indirectly for workshops, laboratory tests, materials for regular repairs and maintenance, tools, equipment, machines, and supplies for management, operation, and maintenance of power lines, substations, transformers, office works, and other relevant costs determined according to the norms issued by competent authorities;

a2) Material costs in case of incidents: costs of materials used for unforeseen and objective incidents, determined according to legal regulations.

b) Total material costs expected in year N (VND) shall be determined using the following formula:

Where:

b1)  : Total generation output expected in year N (kWh), which shall be determined as follows:

b2) : Norm of material costs determined according to the regulations issued by competent authorities (VND/kWh);

b3) : Indexation rate in year N determined by the average CPI of the 03 most recent years prior to the price establishment, Where years with significant CPI fluctuations shall be excluded  (%).

b4) : Material costs in case of incidents expected in year N (VND);

3. Methods for determining personnel costs:

Total personnel costs expected in year N  of electricity transmission units including total payroll cost and salary-related cost, which shall be determined according to legal regulations.

Payroll costs of the National Power Transmission Corporation shall be determined according to regulation on personnel management, salaries, bonuses for employees, and salaries, remunerations, bonuses for managers. Salary-related costs of the National Power Transmission Corporation include: costs of electrical safety regulations, health insurance, social insurance, unemployment insurance, and union fees according to relevant legal regulations.

For other electricity transmission units, personnel costs shall be determined according to legal regulations or using the following formula:

Where:

a) NGTS_N : Historical costs of fixed assets for transmission expected in year N of electricity transmission units (VND);

b) k_nc : Ratio of personnel costs (%).

4. Methods for determining major repair costs

 Total major repair costs expected in year N  includes major repair costs on structures serving electricity transmission process, determined according to the norms issued by competent authorities.

5. Methods for determining outsourced service costs:

a) Total outsourced service costs expected in year N , including:

a1) Costs paid to organizations, individuals outside the unit providing the following services:  electricity, water, telecommunications services, newspapers; hiring of audit consultants; property rental; property insurance;

a2) Costs for other services with service contracts to serve the management, operation and maintenance of power transmission stations and lines.

b) Total outsourced service costs expected in year N (VND) shall be determined using the following formula:

Where:

b1)  : Total transmission output expected in year N (kWh)

b2) ĐG_MN: Norm of outsourced service costs determined according to the regulations issued by competent authorities (VND/kWh);

b3) : Indexation rate in year N determined according to the provisions of point b Clause 2 of this Article (%).

6. Methods for determining other monetary costs

a) Total other monetary costs expected in year N  includes: other monetary costs within norms, other monetary costs in case of incidents, taxes, fees, land rents, shift meal costs, and other costs stipulated by law; 

b) Total other monetary costs expected in year N (VND) shall be determined using the following formula:

Where:

b1)  : Total transmission output expected in year N (kWh);

b2) DG_K: Norm of other monetary costs determined according to the regulations issued by competent authorities (VND/kWh);

b3) : Indexation rate in year N determined according to the provisions of point b Clause 2 of this Article (%).

b4) :  other monetary costs in case of incidents in year N (VND);

b5) : taxes, fees, land rents in year N (VND);

b6) : shift meal costs in year N (VND).

c) Other monetary costs within norms in year N include: Work-trip costs, conference and guest reception costs; training costs; scientific research and innovation costs; costs for self-defense, protection, disaster prevention, fire fighting; costs for labor safety, workwear, occupational safety, industrial and environmental hygiene; costs for drinking water during work hours, perquisites for employees working in night shift or in hazardous conditions, first aid for occupational accidents, common medicine, rehabilitation for workers; recruitment costs, and other costs stipulated by law;

d) Other monetary costs in case of incidents : Other monetary costs used for unforeseen and objective incidents, determined according to legal regulations.

dd) Taxes, fees, land rents in year N  shall be determined on the basis of expectation in year N; 

e) Shift meal costs in year N  shall be determined according to the applicable regulations.

7. In cases where costs within norms cannot be determined as stipulated in Clauses 2, 4, 5, and 6 of this Article, the total major repair costs and other costs within norms (including material costs, outsourced service costs, other monetary costs) shall be determined using the following formula:

Where:

a) : total major repair cost and other costs within norms norms (including material costs, outsourced service costs, other monetary costs) of electricity transmission units (VND);

b) k_scl,k : ratio of major repair costs and other costs within norms (%).

Chapter III

PROCEDURES FOR FORMULATING, APPRAISING, AND APPROVING ELECTRICITY TRANSMISSION PRICE

Article 8. Procedures for approving electricity transmission price

1. Before November 20th of each year (year N-1), electricity transmission units shall formulate and submit their electricity transmission price in year N to electricity authorities for appraisal; electricity authorities shall report them to Minister of Industry and Trade for approval.

2. Electricity authorities shall review documents for electricity transmission price within 07 days from the receipt of such documents from electricity transmission units.  In cases where the documents are unsatisfactory as specified in Article 9 of this Circular, electricity transmission units shall complete, supplement such documents within 5 working days from the date of receiving the request from the electricity authority.

3. Electricity authorities shall submit documents on electricity transmission price in year N and solicit relevant ministries, authorities for feedback (if any). Relevant ministries, authorities shall respond in writing within 05 working days from the date on which they they receive the request from electricity authorities.

4. Within 25 working days from the date on which electricity transmission units provide satisfactory documents specified in Article 9 of this Circular, the electricity authority shall appraise the documents on electricity transmission price in year N or employ consultants to appraise the documents (if necessary), and submit it to the Minister of Industry and Trade for approval. The Minister of Industry and Trade shall approve the electricity transmission price within 07 working days from the date of document submission.    

5. During the time when the electricity transmission price in year N has not been approved, parties may agree to make advance payment according to the electricity transmission agreement until the electricity transmission price in year N is approved. The price for advance payment is based on the electricity transmission price in year N-1. Any difference between the temporarily calculated price and the electricity transmission price of the year shall be settled by the parties after the electricity transmission price in year N is approved

Article 9. Documents on electricity transmission price

1. Written approval for electricity transmission price in year N.

2. Explanatory documents and calculation of electricity transmission price in year N, including:

a) Analysis and evaluation of the implementation of electricity transmission, transmission loss rates, and revenues in year N-1

b) Explanatory documents and calculation of normal profit in year N (LN_N) of electricity transmission units, including:

b1) Equity capital at June 30 of year N-1;

b2) Expected profit rate on equity capital in year N.

c) Explanatory documents and calculation of total capital costs in year N  of electricity transmission units, including:

c1) Total depreciation costs in year N: Table of fixed asset depreciation costs in year N and detailed calculation of basic depreciation costs by fixed asset type in year N;

c) Total financial costs and exchange rate differences in year N: Detailed calculation of financing costs, detailed interest rates, and exchange rate differences in year N.

c) Explanatory documents and calculation of total operational and maintenance costs in year N  of electricity transmission units, including:

d1) Total material costs for year N: Explanatory documents and calculation of estimated material costs in year N-1 and expected material costs in year N stipulated in Clause 2, Article 7 of this Circular;

d2) Total personnel costs in year N: Explanatory documents and calculation of payrolls stipulated in Clause 3, Article 7 of this Circular;

d3) Total major repair costs in year N: Explanatory documents and calculation of major repair costs stipulated in Clause 4, Article 7 of this Circular;

d4) Total outsourced service costs for year N:  Explanatory documents and calculation of estimated major repair costs in year N-1 and expected major repair costs in year N stipulated in Clause 5, Article 7 of this Circular;

d5) Other monetary costs in year N: Explanatory documents and calculation of estimated other monetary costs in year N-1 and expected other monetary costs in year N stipulated in Clause 6, Article 7 of this Circular;

dd) Explanatory documents and calculation of total electricity transmission revenue in year N of each electricity transmission unit.

3. Supporting documents:

a) List and value of completed investment projects, scheduled to be put into operation by December 31 of year N-1 and year N (monthly) in accordance with the National power development planning and the approved annual electricity transmission grid expansion plans of electricity transmission units.

b) Table of the number of employees in year N-1 and expected number of employees in year N;

c) Report on the implementation of major repairs of fixed assets in year N-1 and expected major repairs in year N;

d) Financial statement in year N-2 audited by an independent auditor: Balance sheet, business performance report, cash flow statement, explanatory report;

dd) Cost component norms used in documents approved by competent authorities.

4. In case there is an audited financial statement in year N-1, the cost data for Year N-1 specified in Clause 2 of this Article shall be updated based on the audited financial statement for Year N-1.

5. Documents on electricity transmission price shall be made in written form, or as a legally valid electronic message in accordance with legal regulations. Electricity transmission units shall submit 01 set of documents in electronic form or directly submit 01 set of documents in written form (if necessary) to the electricity authority.

Article 10. Adjustment on electricity transmission price

1. At the end of the third quarter every year, based on the fluctuations of input parameters stipulated in Clause 3 Article 3 of this Circular, electricity transmission units shall formulate adjusted electricity transmission price plans and submit calculation reports to electricity authorities for appraisal in accordance with Article 5 of this Circular.

2. Electricity authorities shall review documents on adjusted electricity transmission price within 07 working days. In cases where the documents on adjusted electricity transmission price are unsatisfactory as specified in Article 5 of this Circular, the electricity transmission unit shall complete, supplement such application within 5 working days from the date of receiving the request from the electricity authority.  Electricity authorities shall submit documents on adjusted electricity transmission price and solicit relevant ministries, authorities for feedback (if any). Relevant ministries, authorities shall respond in writing within 05 working days from the date on which they they receive the request from electricity authorities.

3. Within 25 working days from the date on which the electricity transmission unit provide satisfactory documents as specified in Clause 5 of this Article, the electricity authority shall appraise the documents on adjusted electricity transmission price in year N or employ consultants to appraise the documents (if necessary), and submit the documents to the Minister of Industry and Trade for approval. The adjusted electricity transmission price in year N shall be applied in year N after approval.

4. Within 7 working days from the date on which the electricity authority submit the documents on adjusted electricity transmission price, the Minister of Industry and Trade shall approve the adjusted electricity transmission price.

5. Documents on adjusted electricity transmission price in year N include:

a) Written approval for adjusted electricity transmission price;

b) Explanatory documents and calculation of adjusted electricity transmission price by electricity transmission units based on the input parameters of electricity transmission price;

c) Other relevant documents (if any).

6. Documents on adjusted electricity transmission price shall be made in written form, or as a legally valid electronic message in accordance with legal regulations. Electricity transmission units shall submit 01 set of documents in electronic form or directly submit 01 set of documents in written form (if necessary) to the electricity authority.

7. Any difference between the payable based on the approved electricity transmission price in year N and payable based on the adjusted electricity transmission price in year N shall be settled by the parties after the approval of the adjusted electricity transmission price in year N in accordance with the electricity transmission agreement.

Chapter IV

IMPLEMENTATION

Article 11. electricity transmission agreements

1. Electricity transmission agreement shall be signed between and transmission grid users.

2. Transmission grid users shall pay electricity transmission fees to the electricity transmission units according to the signed agreement.

Article 12. Responsibilities of relevant units

1. Electricity authorities shall appraise the annual electricity transmission price and submit it to the Minister of Industry and Trade for approval.

2. Responsibilities of electricity transmission units:

a) Formulate annual electricity transmission price in accordance with this Circular;

b) Cooperate with competent authorities and relevant electricity suppliers and recipients in negotiation and agreement on technical design of metering systems, data collection systems for metering electricity consumption, metering boundaries, electricity supply and delivery methods in accordance with regulations on electricity metering issued by the Minister of Industry and Trade to determine the electricity transmission output;

c) Negotiate with EVN about electricity transmission agreements in accordance with regulations;

d) Formulate or employ specialized consultants to formulate personnel cost ratio, major repair cost ratio, and other cost norms in the calculation of electricity transmission price;

dd) Negotiate with relevant units about connection points, investment boundaries, and operational management boundaries in accordance with the regulations on the electricity transmission system issued by the Minister of Industry and Trade;

e) Report to electricity authorities on adjusting electricity transmission price in year N stipulated in Clause 3 Article 3 and Article 10 of this Circular within 7 working days from the end of year N.

3. EVN shall review and provide feedback on documents on electricity transmission price formulated by electricity transmission units at request of electricity authorities for consideration and decision of the Ministry of Industry and Trade.

Article 13. Implementation

1. This Circular comes into force from February 01, 2025.

2. The following Circulars are abrogated:

a) Circular No. 02/2017/TT-BCT dated February 10, 2017 of the Minister of Industry and Trade;

b) Circular No. 14/2022/TT-BCT dated September 30, 2022 of the Minister of Industry and Trade;

3. Difficulties that arise during the implementation shall be reported to Ministry of Industry and Trade for consideration./.