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Economy • 26 November, 2018

Ministry of Energy to approve decree on cutting electricity and commercial gas prices

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Regular meeting of the Government chaired by the Prime Minister Bakytzhan Sagintayev began with the consideration of the work to implement the President’s instructions given at the Security Council meeting Nov. 7, 2018. Minister of Energy Kanat Bozumbayev reported on the work being done to reduce electricity tariffs.

Recall, at the Security Council meeting chaired by the Head of State, the issues of forming current tariffs for electricity and heat, as well as the activities of state bodies that control energy pricing were discussed.

Bozumbayev reported that, in accordance with the Head of State’s instructions, the Ministry of Energy is completing work to establish an objective level of marginal tariffs for electric energy. Preliminary results of the work were submitted for consideration by the Working Group that includes Presidential Administration, the General Prosecutor's Office, government agencies and the National Chamber of Entrepreneurs. The proposed level of marginal tariffs for electricity were discussed at the meeting.

“The weighted average electricity cost reduction as the sum of the two components from the level of current marginal tariffs is 25%. The ministry’s approach have been generally supported,” said Bozumbayev.

In addition, at the meeting of the Working Group, the need to reduce the marginal value of the capacity tariff to ensure the electricity cost reduction for final consumers from 700 thousand tenge to 590 thousand tenge per 1 MW was raised.

At the meeting, according to the Ministry of Energy, the official position of the National Chamber of Entrepreneurs was heard. This will allow to submit the appropriate draft order defining the criteria to the Ministry of Justice for approval and registration.

“We expect to approve the new reduced power tariff level by the end of this week. This will help conduct centralized trading in the first decade of December 2018. According to the bidding results, marginal tariffs for electricity from energy producing organizations will be approved,” the Minister of Energy said.

In addition, Bozumbayev noted the importance of two aspects: preserving the current price of coal for power plants and reducing the cost of its transportation with the exception of intermediary structures; reduction of tariffs for energy transmission and energy supplying organizations from Jan. 1, 2019, to the current value.

With regard to commercial gas, the ministry has developed a draft Order providing for the reduction of marginal wholesale prices. According to estimates of the Ministry of Energy, the reduction of the marginal wholesale prices will cut the final prices from Jan. 1, 2019, for power plants using gas, from 12-22% depending on the region.

At the moment, the Ministry of Energy is awaiting confirmation by the Natural Monopolies Regulatory Committee of the Ministry of National Economy of the level of marginal wholesale prices through appropriate calculations of retail prices for the fuel and energy complex for the generation of electricity and heat for the population.

Based on the gas price cuts by the Ministry of Energy, the Committee on the Regulation of Natural Monopolies will adopt appropriate orders to reduce retail gas prices for power plants.

Measures to reduce prices for electricity and commercial gas will be implemented after the approval of the relevant Ministry of Energy’s Decrees with their enactment Jan. 1, 2019.

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