Energy-producing organizations of Kazakhstan filed an application for adjustment of the marginal tariff

The electricity industry in Kazakhstan needs to upgrade existing assets. Thanks to the capacity  market introduced in 2019, the assets of the plants began to be upgraded. However, according to forecast estimates, the revenues received from the capacity market do not allow to fully modernize and upgrade the equipment of plants that have already exhausted their fleet life, the press service of the Ministry of Energy of the Republic of Kazakhstan reports.

The depreciation level of plants is increasing year by year. In this connection, the quality of power supply is compromised.

The current level of marginal tariffs of energy-producing organizations (hereinafter - EPO) does not fully cover the costs of EPO, and the plants are forced to allocate part of the revenues from the power market to cover current costs.

Depreciation of the equipment is about 60%. This fact is confirmed by the frequent cases of emergency power outages, a decrease in the quality of power supply to consumers and an increase in the risks of dependence of the integrated electric power system of Kazakhstan on neighboring countries.

In 2019, due to depreciation of capacities, insufficient maneuverability and numerous emergencies, Kazakhstan was forced to purchase electric capacities control services from neighboring countries for more than 8 billion tenge, which ultimately has a negative impact on the tariff of Kazakhstanis.

If the situation persists, the funds that can be used in Kazakhstan’s energy sector for reconstruction, modernization and renewal of plants will also get away to neighboring countries.

If the marginal tariffs of EPO are changed, the end consumers average payment bill for electricicity of  statistical average apartments* can increase to current bills for the amount of not more than 200 tenge per month no earlier than the fourth quarter.

In turn, it will be possible to fully use the amount of investment for modernization of power plants, which for the current year should be more than 70 billion tenge.

The electricity price of energy-producing organizations is set in accordance with an agreement between consumer and supplier, including energy-supplying organizations, but not higher than the marginal tariff established by the state body.

Tariffs for electricity in accordance with the Law are set for 7 years; however, costs of electricity production at power plants annually grow up. In the event of an actual increase in the costs of energy-producing organizations for the production of electricity, EPO is entitled to submit an application to the authorized body for adjusting the marginal tariff.

Since the beginning of 2020, EPO-independent costs have increased for:

• The purchase of fuel (an increase of 9.9%), of electricity from renewable energy sources (an increase in the renewable energy tariff by 9.3%, the volume of compulsory purchase of renewable energy has doubled);
• Obligatory payments to the budget (the increase depends on the growth of Monthly Calculation Index (MCI); system operator control services (12% increase).