Decision No. 709/QD-BCT dated March 08, 2017 on approval for plan for operation of pilot competitive wholesale electricity market in 2017

DECISION

ON APPROVAL FOR PLAN FOR OPERATION OF PILOT COMPETITIVE WHOLESALE ELECTRICITY MARKET IN 2017

THE MINISTER OF INDUSTRY AND TRADE

Pursuant to the Law on Electricity dated December 03, 2004 and Law on amendments to some articles of the Law on Electricity dated November 20, 2012;

Pursuant to the Government’s Decree No. 95/2012/ND-CP dated November 12, 2012 defining functions, tasks, entitlements and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Decision No. 63/2013/QD-TTg dated November 08, 2013 of the Prime Minister on roadmap, conditions and structure of electricity sector for formation and development of different levels of electricity market in Vietnam;

Pursuant to the Decision No. 8266/QD-BCT dated August 10, 2015 of the Minister of Industry and Trade on approval for detailed design of Vietnam's competitive wholesale electricity market;

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

HEREBY DECIDES:

Article 1. The plan for operation of pilot competitive wholesale electricity market in 2017 is approved. To be specific:

1. Purposes

a) Test mechanisms for operation of the competitive wholesale electricity market, including: operation of electricity spot market, vesting, payment made in the spot market, agreement settlement and regulation mechanism among power corporations;

b) Assess effects on revenues of generators, electricity purchase costs of Electricity Corporations in the competitive wholesale electricity market;

c) Review and draw on experience of operation of pilot competitive wholesale electricity market in order to consider adjusting mechanisms for operation of the complete competitive wholesale electricity market.

2. Scope and entities

a) Scope

- Consider distribution of agreements: applicable to power plants directly involved in the electricity market.

- Generators directly involved in the electricity market and Electricity Corporations shall cross-check and confirm the spot market payment list and settle the agreement;

- Simulate operation and payment (scheduled for the third quarter of 2017);

- Consider making real payment if the conditions precedent are satisfied (scheduled for the fourth quarter of 2017);

- Estimate and assess the regulation demands among power corporations in 2017.

b) Entities

- Vietnam Electricity (EVN);

- Generators involved in the competitive electricity generation market;

- Northern, Central, Southern, Hanoi City and Ho Chi Minh City power corporations (hereinafter referred to as “power corporations”);

- National Load Dispatch Centre;

- Electric Power Trading Company;

- National Power Transmission Corporation.

3. Contents

a) Electrical measurement

- Complete the system of electrical measuring equipment: The National Power Transmission Corporation and power corporations shall continue to upgrade their metering infrastructure in accordance with regulations of the Circular No. 42/2015/TT-BCT dated December of the Ministry of Industry and Trade on electrical measurement in electricity system (hereinafter referred to as “Circular No. 42/2015/TT-BCT”) and reach an agreement with relevant authorities according to existing metering infrastructure in order to determine redundant metering system and delivery methods to ensure main metering data  and redundant metering data are available to serve operation of pilot competitive wholesale electricity market in 2017;

- Collect and manage metering data:

+ The National Load Dispatch Centre shall collect metering data from the electricity wholesale boundary metering points of power corporations to serve payment and operation of pilot competitive wholesale electricity market.

+ The National Power Transmission Corporation and power corporations shall collect metering data from boundary metering points under their management and provide data for the National Load Dispatch Centre;

+ Power corporations shall inspect, cross-check and give confirmation of their boundary metering data within a single trading interval to the National Load Dispatch Centre. The Electric Power Trading Company shall inspect, cross-check and give confirmation of their data of electricity meters measured within the transmission grid within a single trading interval.

- Metering data in service of operation of pilot competitive wholesale electricity market in 2017 shall be collected and managed in accordance with regulations of the Circular No. 42/2015/TT-BCT and its instructional documents.

b) Forecasting load of power corporations

Power corporations shall:

- prepare  a plan and provide training, install equipment necessary for their medium and long-term load forecasting in order to determine the quantity of signed agreements and manage risks in the electricity market in the medium term and long term;

- Carry out review and assessment to complete their load forecasting, satisfying the requirements for operation of pilot competitive wholesale electricity market in 2017 and next periods.

c) Consider distributing power purchase agreements from EVN to power corporations

- Consider testing the two following agreement distribution plans:

+ Plan 1: distribute all signed agreements between EVN and generators to power corporations according to the rules specified in the Decision No. 8266/QD-BCT dated August 10, 2015 of the Minister of Industry and Trade on approval for detailed design of Vietnam's competitive wholesale electricity market.

+ Plan 2: distribute some power purchase agreements to power corporations.

- The Electricity Regulatory Authority of Vietnam (hereinafter referred to as “ERAV”) shall cooperate with electricity market participants in completing the plan and piloting 02 aforementioned plans; assess feasibility of the 02 plans to propose an appropriate plan for operation of official competitive wholesale electricity market from 2019.

d) Regulation mechanism among power corporations

- Assess and estimate regulation demand among power corporations according to the two following plans:

+ Plan 1: regulate through a balanced account and adopt Plan 1 specified in Point c of this Clause.

+ Plan 2: regulate through Bulk Supply Tariffs (BST) charged to power corporations by EVN and adopt Plan 2 specified in Point c of this Clause.

- The ERAV shall take charge and cooperate with EVN, power corporations and relevant units in estimating and assessing regulation demand among power corporations in 2017, and completing the plans for carrying out regulation mechanism among power corporations in combination with the plans specified in Point c of this in the competitive wholesale electricity market from and submit them to the Ministry of Industry and Trade for consideration.

dd) Calculating market price and make payment in the electricity market

- Trading interval: 01 hour;

- Payment period: 01 month;

- Calculating spot market prices:

+ Spot market price is applied to power plants, including System Marginal Price (SMP), Capacity Add-on (CAN) price and other prices calculated according to regulations on competitive electricity generation market;

+ Spot market price is applied to power corporations, including Corporation system marginal price (CSMP) prices, Corporation capacity add-on (CCAN) prices and uplift costs. CSMP and CCAN prices are calculated according to the rules for converting SMP and CAN prices based on the average power loss within a trading interval. Uplift costs are calculated according to the rules to be able to recover all costs of purchase of electricity from power plants indirectly trading in the market.

- Determining trading electricity:

+ Trading electricity of power plants involved in the spot market is determined according to regulations on competitive electricity generation market;

+ Trading electricity of power corporations involved in the electricity market is determined according to power corporations’ upstream electricity within a trading interval using the metering data collected as prescribed in Point a of this Clause.

- Making payment in the spot market: the National Load Dispatch Centre shall make payment in the spot market made to generators and power corporations according to their delivered electricity and system marginal price. Relevant units shall cross-check and confirm payment documents and lists every month.

- Consider settling agreement: the generator and the Power Corporation shall settle and cross-check settlement of distributed agreement according to its quantity, agreement price and total system marginal price applied to the generator.

4. Implementation phases

a) Phase 1: From the first quarter to the end of the second quarter of 2017

Collect electrical metering data, forecast power corporations’ load, consider distribution of agreements and estimate regulation demand among power corporations as prescribed in Points a, b, c and d, Clause 3 of this Article.

b) Phase 2: In the third quarter of 2017

- Simulate operation and payment in the pilot wholesale market under two scenarios corresponding to two agreement distribution plans prescribed in Point c, Clause 3 of this Article according to metering data collected as prescribed in Point a Clause 3 of this Article.

- Necessary requirements for simulating operation and payment:

+ Collect all metering data at boundary metering points of power corporations;

+ Complete distribution of agreements of the power plants directly involved in the electricity market to power corporations according to the two plans specified in Point c, Clause 3 of this Article.

+ Complete information technology infrastructure in order to collect, manage and confirm metering and calculation data, cross-check payment made in the spot market and manage provision of information through the electricity market website.

c) Phase 3: Expected to begin in the fourth quarter of 2017

- Consider distribution of agreements according to Plan 2: distribute agreements to new power plants expected to be operated in 2017 and 2018, grant permission to directly sign power purchase agreement with power corporations.

- According to results of pilot implementation of phase 2 prescribed in Point b of this Clause, consider making real payment in the competitive wholesale electricity market in 2017 after satisfying all of the following conditions precedent:

+ Continue to develop the legal framework, including: regulations on operation of the competitive wholesale electricity market, proposed regulations on electricity transmission service payment which shall be conformable with ones on competitive wholesale electricity market and other relevant regulations. Consider proposing financial mechanism entrusted to power corporations involving in the competitive wholesale electricity market;

+ Perfect organizational structure of the National Load Dispatch Centre and develop its personnel to serve operation of the competitive wholesale electricity market;

+ Perfect necessary infrastructure system, including payment system, payment assistance system and payment account system at the National Load Dispatch Centre and relevant market participants in order to serve payment made in the electricity market.

+ Distribute and forward the agreement between EVN and generators to power corporations;

+ Collect all metering data at boundary metering points of power corporations as prescribed in Point a, Clause 3 of this Article.

Article 2. Implementation

1. Assign the ERAV to:

a) promulgate detailed guiding documents on simulation of operation and payment (phase 2) and collect metering data before March 31, 2017;

b) take charge and cooperate with relevant units in considering distribution of agreements according to the plans specified in this Decision before June 15, 2017. Carry out pilot assessment of distribution plans to request the Ministry of Industry and Trade to consider issuing a decision on distribution of power purchase agreements to the competitive wholesale electricity market participants.

c) prepare and request the Ministry of Industry and Trade to promulgate documents on guidelines for estimating regulation demand among power corporations in the pilot competitive wholesale electricity market before April 30, 2017;

d) supervise and encourage units to carry out operation of pilot competitive wholesale electricity market in 2017 in accordance with regulations of this Decision;

dd) supervise, assess and submit periodic reports on operation of pilot competitive wholesale electricity market in 2017 to the Ministry of Industry and Trade.

2. Assign EVN to:

a) provide funding and direct the National Load Dispatch Centre, National Power Transmission Corporation and power corporations to cooperate in collecting remote metering data at boundary metering points of power corporations to serve operation of pilot competitive wholesale electricity market in 2017;

b) construct information technology infrastructure to serve the complete wholesale electricity market as prescribed in the Decision No. 2760/QD-BCT dated June 30, 2016 of the Ministry of Industry and Trade on approval for general design of information technology infrastructure in service of competitive wholesale electricity market;

c) prepare a plan for perfecting organizational structure, position, functions and tasks of the National Load Dispatch Centre to satisfy requirements for operation of pilot competitive wholesale electricity market and submit it to the Ministry of Industry and Trade before June 15, 2017;

a) provide training for power corporations, National Load Dispatch Centre and relevant affiliates of EVN to satisfy requirements for operation of pilot competitive wholesale electricity market in 2017 and the next years;

d) direct power corporations to provide training, increase capacity, carry out research and develop methods and tools for forecasting power corporations' load to satisfy requirements for competitive wholesale electricity market;

e) cooperate with ERAV and direct its affiliates to develop methods, consider distribution of agreements and estimate regulation demand among power corporations.

3. Assign the National Load Dispatch Centre to:

a) complete preparation for simulation of operation and payment before June 15, 2017. To be specific:

- Establish metering database to satisfy requirements for competitive wholesale electricity market. Manage metering data measured at boundary metering points and obtained from the National Power Transmission Corporation and power corporations in order to simulate operation and payment made in the pilot competitive wholesale electricity market in 2017;

- Upgrade software, payment tools, electricity market website and relevant tools to satisfy requirements for implementation of phase 2 of the plan for operation of pilot competitive wholesale electricity market in 2017 according to Point b, Clause 4, Article 1 of this Decision.

b) complete preparation for real payment before September 15, 2017. To be specific:

- Collect remote metering data at boundary metering points of  Power as prescribed in Points a, Clause 3, Article 1 of this Decision;

- Perfect necessary infrastructure to serve real payment made in the wholesale electricity market in 1as prescribed in Point c, Clause 4, Article 1 of this Decision.

c) review and formulate a plan for training and improving personnel and information technology infrastructure to satisfy requirements for implementation of phases of operation of wholesale electricity market in 2017 and submit it to EVN;

d) calculate power loss in 2017, including: power loss on entire transmission system, power loss on line connecting regions, power loss from the delivery point of a power plant to the reference node representing a region to serve payment made in the competitive wholesale electricity market. Submit a report to ERAV in the third quarter of 2017;

dd) submit reports on operation of pilot competitive wholesale electricity market in 2017 before the 10th every month to ERAV.

e) instruct power corporations in considering formulating plans and installing tools for forecasting power corporations' load, making payment, cross-checking and confirming payment and using current software.

4. Assign the National Power Transmission Corporation to:

a) continue to improve the metering infrastructure under its management according to the Circular No. 42/2015/TT-BCT;

b) install necessary equipment at substations that have delivery metering points bordering with power corporations under the management of EVN to completely establish a connection to the metering data collection system of the National Load Dispatch Centre before June 15, 2017. Cooperate with the National Load Dispatch Centre to completely establish a connection to its metering data collection system before September 15, 2017;

c) Complete the metering data collection and management system to collect and provide metering data at metering points bordering power corporations for the National Load Dispatch Centre to serve operation of pilot competitive wholesale electricity market in 2017 before June 15, 2017.

5. Assign power corporations to:

a) complete preparation for infrastructure and personnel to satisfy requirements for participation in pilot competitive wholesale electricity market in 2017;

b) prepare a plan, provide training, complete methods and install tools for forecasting load to satisfy requirements for operation of wholesale electricity market before September 15, 2017;

c) complete the metering data collection and management system to collect and provide metering data at boundary metering points under their management and provide it for the National Load Dispatch Centre to serve operation of pilot competitive wholesale electricity market in 2017 before June 15, 2017;

b) cooperate with the National Load Dispatch Centre in completely establish a connection to its metering data collection system to collect remote metering data at boundary metering points under their management before September 15, 2017;

dd) cooperate with ERAV in developing methods, considering distribution of agreements and assessing regulation demand among power corporations;

e) submit reports on participation in pilot competitive wholesale electricity market in 2017 and issues that arise before the 10th every month to ERAV.

6. Assign the Electric Power Trading Company to:

a) consolidate all lists of metering points and delivery methods at the electricity purchase boundary, review methods of delivering electricity to power corporations,

c) cooperate with the National Load Dispatch Centre in collecting remote metering data at boundary metering points to serve pilot operation of competitive wholesale electricity market in 2017 before September 15, 2017;

a) complete preparation for infrastructure and personnel to satisfy requirements for participation in pilot competitive wholesale electricity market in 2017;

d) cooperate with generators in providing and converting agreement for power corporations under the direction of ERAV and Ministry of Industry and Trade.

7. Assign generators to complete preparation for infrastructure and personnel to satisfy requirements for participation in pilot competitive wholesale electricity market in 2017.

Article 3. The Director of Electricity Regulatory Authority of Vietnam, Chief of the Ministry Office, Chief of the Ministry Inspectorate, Directors and General Directors of relevant departments or authorities affiliated to Ministries, General Director of Vietnam Electricity, generators, power corporations, National Load Dispatch Centre, Electric Power Trading Company, National Power Transmission Corporation and relevant organizations and individuals are responsible for the implementation of this Decision./.

APPENDIX

PROGRESS IN PREPARATION FOR OPERATION OF PILOT COMPETITIVE WHOLESALE ELECTRICITY MARKET IN 2017
(Enclosed with the Decision No. 709/QD-BCT dated March 08, 2017 of the Minister of Industry and Trade)