On August 31, 2023, the Ministry of Industry and Trade issued Circular No. 16/2023/TT-BCT ("Circular 16") guiding the power purchase contract for domestic purposes between electricity retailers (hereinafter referred to as "Electricity selling enterprises") and electricity users for domestic purposes (hereinafter referred to as "Buyers") replacing Circular No. 19/2014/TT-BCT dated June 18, 2014 and Circular No. 38/2022/TT-BCT dated 30/12/2022.
Circular 16 promulgates the model of a power purchase contract for domestic purposes ("Power Purchase Contract") in the direction of increasing the freedom of agreement for the parties to the contract. Here are some changes in the Power Purchase Agreement form.
1. Electricity-selling enterprises may only change the time for determining meter readings with the consent of the electricity buyer
According to Circular 16, the date of meter readings must be clearly defined in the Power Purchase Contract and agreed upon by the two parties. The disclosure of this meter reading date helps electricity buyers have a basis to monitor, supervise and control the meter readings of electricity-selling enterprises, electricity consumption by day and increase transparency in the management of electricity metering and counting activities. At the same time, electricity-selling enterprises will easily account for electricity revenue incurred correctly and sufficiently each month, ensuring compliance with regulations.
The meter readings are fixed monthly, but the timing of meter readings can be shifted before or after a day. In case of necessity, the electricity-selling enterprise may change the meter reading date agreed upon in the Power Purchase Contract. However, this change must be notified to the Buyer and must be agreed upon by the Buyer to be implemented.
Stipulate that electricity-selling enterprises are not allowed to arbitrarily adjust the date of recording this electricity meter index to ensure that the buyer of electricity is actively arranging witnesses and confirming meter readings. From there, avoid fraudulent phenomena or contradictions in determining the index and value of electricity bills.
2. Electricity-selling enterprises must respond to requests of electricity buyers within 07 days
When there is any information to be exchanged, unless otherwise specified, within 07 days from the date of receipt of the request, the party receiving the request must respond to the request/disagree with the request of the party sending the request.
However, in case the buyer does not agree on the amount of electricity to be paid, the settlement time will last at least 15 days. Pending the settlement, the buyer is still obliged to pay electricity bills according to payment documents and the electricity-selling enterprises may not stop supplying electricity, unless the buyer fails to pay the electricity bill.
3. Obligations to protect the interests of consumers of electricity-selling enterprises
- Notify the retail price of domestic electricity of the electricity selling enterprises to the buyer before signing the contract or when there is a change in the retail price of domestic electricity;
- Upon receipt of the buyer's notice of the purpose of electricity use, resulting in a change in electricity prices; change in the number of shared households registered in the contract; change in living norms; or if there is a need to terminate the contract, the electricity selling enterprise shall inspect, amend, supplement or terminate the Power Purchase Contract within 15 days from the date of receipt of the notice;
- Notify the buyer of the contract termination at least 07 working days before the contract termination date;
- To protect the buyer's information, not to collect, use or transfer the buyer's information to another third party without the buyer's consent;
- Warning about the possibility of causing unsafety of electricity use, adversely affecting the life, health and property of the buyer or related parties.
4. Remove the limit on violations
Circular 16 stipulates that the parties will have the right to agree with each other on the penalty for breach of contractual obligations on the basis of compliance with legal provisions, instead of fixing a fine of 8% of the value of the breached contractual obligation as at present. This provision is consistent with the nature of the penalty for violation – that is, the agreement between the parties to the contract. Therefore, the parties must be entitled and self-responsible when negotiating and choosing the penalty for violation when signing the Power Purchase Contract.
5. To abandon conciliation procedures at the Department of Industry and Trade as a mandatory form in dispute settlement between the parties
According to the previous regulations, in case a dispute arises, if the two parties after self-negotiation fail to achieve results, they can request the Department of Industry and Trade to organize mediation. Circular 16 only stipulates that the order of dispute settlement is in accordance with the law. Compared with current regulations, it can be seen that the organization of mediation can be carried out not only at the Department of Industry and Trade but also at the Electricity Regulatory Authority[1]. Concrete:
- Department of Industry and Trade: Resolving disputes over power purchase contracts with voltage levels up to 110KV.
- Electricity Regulatory Authority: Resolving disputes over Power Purchase Contracts with voltage levels above 110KV.
Accordingly, depending on the specific type of contract, the parties will agree to choose one of the above two agencies to settle the dispute. The competent authority will settle if the parties cannot negotiate on their own, have a proposed agreement, and must ensure that civil or commercial arbitration proceedings have not been conducted.
Circular 16 takes effect from October 16, 2023. Contracts signed before the effective date of Circular 16 shall continue to be executed until the expiry of the term stated in the contract. During the implementation process, the two parties may agree to add new contents in accordance with the new contract form or re-sign the contract before maturity according to Circular 16.
[1] Article 24 of Circular 42/2022/TT-BCT.
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