Reform in the power supply industry of the Republic of Kazakhstan: how tariffs have changed

The country's leading power grid company, KEGOC JSC, has improved its key positions after fundamental changes in the electricity market - the introduction of the Single Electricity Purchaser mechanism. Introduction

from July 1 of this year, the new market model led to a change in the list of regulated services provided and existing tariffs. Along with the electricity transmission service, KEGOC began to provide consumers with a service to use the national power grid, which expanded the list of consumers and, accordingly, improved the company's profit forecasts.

In other words, if earlier some enterprises or regional distribution networks bought energy from the nearest power plants, where there is the necessary capacity, at prices dictated by the supplier, now a subordinate enterprise of the Ministry of Energy (SFC for RES Support LLP) purchases from all power producers at fixed prices and with the help of KEGOC’s networks delivers to these consumers also at fixed tariffs. At the same time, earlier prices were highly dependent on the region, on the supplier, on seasonality, on congestion, on oversupply or lack of energy produced, but innovations helped to average the price, make it more fair for all consumers in the country, optimize supply costs, reduce losses, downtime and overload for manufacturers.

For comparison, the previous tariff level for the electricity transmission service for the period from October 1, 2022 to June 30, 2023 was 2,848 tenge/kWh. The new tariff for this service changed slightly (3%) and amounted to 2.935 tenge/kWh. At the same time, the new service, which involves exclusively the use of the national power grid, costs almost half (-42%) - 1,651 tenge.

The new tariffs, approved by the Committee for the Regulation of Natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan, ensure that KEGOC covers the costs of maintaining and modernization of networks and equipment, making a profit for the implementation of the company's investment program.

At the same time, it is important to note that the adjustment of tariffs for the company's services will practically not affect the final cost of electricity for consumers. This is due to the fact that the share of the price for power transmission in the total cost is insignificant. In addition, the new market model aims at averaging tariffs and providing equal conditions for all companies and consumers. For some of them, which, due to their location, were forced to purchase at prices dictated to them, the tariff will be reduced almost even by more than twice. For example, due to a lack of capacity, some consumers during certain periods were forced to buy electricity from Russian producers at exorbitant prices.

Thanks to the innovations, KEGOC will be able to calculate the upcoming loads for many years, which will allow more targeted expansion and modernization of its networks and equipment.

At the present time, in accordance with the current legislation of the Republic of Kazakhstan, the Company provides regulated services at tariffs approved for the forthcoming five-year period.

On July 1, 2023, changes regulating the operation of the wholesale electricity market came into force: the mechanisms of the Single Purchaser and the real-time balancing electricity market were introduced.