On 30/09/2022, the Ministry of Industry and Trade issued Circular 14/2022/TT-BCT (“Circular 14”) amending and supplementing several articles of Circular 02/2017/TT-BCT (“Circular 02”) on methods and procedures for establishment, appraisal and approval of electricity transmission prices.
Circular 14 has various new contents related to the type of Electricity Transmission Unit belong to the private economic sector. Specifically, it includes the following notable contents:
Supplement electricity transmission units eligible for operating in the field of electricity transmission
In the spirit of the Law No. 03/2022/QH15 dated January 11, 2022 (“Law 03”), allowing the private sector to participate in the construction and operation of the transmission grid (click here for specification), Circular 14 has also added regulations allowing private sector to invest in the electricity transmission grid as a type of electricity transmission unit, besides the National Electricity Transmission Corporation as previously.
However, Circular 14 also limits its scope of application to “investors who make investments in the construction of transmission grids from the distribution yard of one or several power plants to load the wattage of one or several power plants to the connection point (which is the connection point of equipment, the power grid and power plant into the national electricity system) having a different agreement with the buyer in recovering the construction, management, operation and maintenance costs of the transmission grid”.
Modify the method of determining electricity transmission price
Previously under Circular 02, the determination of electricity transmission price is not specific and still qualitative, according to which: “Electricity transmission price shall be annually determined on the principle of ensuring recovery of appropriate expenses and gaining permissible profits to maintain normal operation of the electricity transmission network as required and meet financial criteria for investment and development of electricity transmission network”.
Circular 14 has added specific criteria for determining electricity transmission price, accordingly: “Electricity transmission prices shall be annually determined on the basis of reasonable and valid expenses for electricity transmission activities of the Electricity Transmission Units with a rate of return on equity determined according to the current electricity retail price plan applied at the time of calculation of electricity transmission rates or decisions of competent authorities”.
Modify the equity calculation to determine the Total permissible capital costs
Equity is one of the components to calculate the Permissible profits from electricity transmission expected in Year N – the criterion for determining the Total permissible capital cost.
Circular 14 supplemented the calculation of Equity for types of Electricity Transmission Unit, in which, for other economic sectors investing in electricity transmission network (according to the Law 03), Equity is capital to form electricity transmission assets invested in accordance with Article 6 of the Law 03 and relevant legal regulations.
Amend the calculation of labor expenses to determine the total permissible costs for operation and maintenance
The term “payroll expenses” in Circular 02 is now changed into the term “labor expenses” according to Circular 14, but the content remains unchanged, still including salary costs and expenses of other wage-nature expenses.
Circular 14 supplemented another formula to calculate labor expenses based on the original price of electricity transmission fixed assets and the rate of labor expenses (%) announced annually by the Ministry of Industry and Trade, applicable in cases where it is impossible to calculate Labor expenses based on component costs as previously prescribed.
Supplement time limit for electricity transmission units to send electricity transmission prices dossiers to the Vietnam Electricity and the Electricity Regulatory Authority
Circular 14 stipulated that: Before November 1st of each year (year N-1), electricity transmission units are responsible for coordinating, establishing and sending electricity transmission costs dossiers of year N to the Vietnam Electricity to synthesize and formulate electricity transmission prices of year N, then sending a copy of the report to the Electricity Regulatory Department for information.
Please find the official text of Circular 14 for other contents.
Circular 14 shall take effect from November 22, 2022.
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