Kazakhstan Electric Association
KEA Established in 1998 Unites 21 participants and 12 observers Among participants 9 distribution companies 3 vertically integrated companies (APC, Astanaenergoservice, Pavlodarenergo) 5 groups of companies («Kazakhstan utility networks», AES, Kazakhmys, Eurasian group, Access) 2 specialized institutes 1 trader KEGOK
TWh Balance of electric energy of Republic of Kazakhstan to 2015 (according to the United Electrical System Development program) Demand Generation
According to the Development program for It is forecasted that consumption of electricity will achieve in TWh in 2015 году TWh It is required to support this increase of demand Reconstruct existing national level power plants and modernize CHPs To build additional MW capacity Total amount of the investments required during this period to support growth of demand is 3,1-3,5 bln USD (without reconstruction of rural distribution networks)
Critical issues in power sector I. Creation of investment climate in power sector 1. Legally envisioned prohibition for state bodies to interfere in the market pricing process in the competitive wholesale and retail electricity markets 2. Reduction of government intervention in the wholesale market (through subsidies of Dzhambul power plant, KEGOK tariffs and restriction of exports/imports) 3. Promotion of long-term contracts II. Improvement of regulation 1. Changing approaches in tariff setting in Discos and CHPs (from cost based approach with control of each items of expenses to “inflation plus investment” methodology) 2. Introduction of methodology of pass through methodology in Electricity supply companies 3. Clear definition of authority of market regulators in the law 4. Independent system operator III. Resolving customer protection issues 1. Introduction of quality standards in area of electricity transmission and supply 2. Transition from social tariffs for everyone to social norms of consumption for vulnerable consumers 3. Energy supply of rural territories IV. Commercial losses and energy efficiency
Regulation in the energy sector Natural Monopolies Regulatory Agency Ministry of Energy and Mineral Resources Competition Committee Commercial operator of the wholesale market - KOREM Regional governors System operator of the wholesale market - KEGOC Power sector of Kazakhstan Retail market operator - Discos
Pass through tariff for electricity supply companies (ESO) Existing regulator’s approach of freezing retail tariff of ESO in condition of price increases in competitive wholesale market prevents development of competition on retail market and would lead to bankruptcy of electricity supply companies 96% of the tariff of electricity supply companies is not under control of the company Everything what is beyond of control of electricity supply company should be passed through to customers (electricity purchase price in wholesale market, transmission and distribution tariffs and etc), Regulator should control and determine only supply surcharge (that includes all other expenditures of electricity supply companies)
Power sector of Kazakhstan - Needs 3 bln USD Financial sector of Kazakhstan - Accumulations of pension funds around 6 bln USD Investments in the energy sector Growth of prices for electricity Better regulatory environment ???