How will the new utility tariffs be approved
Every time we pay utility bills, we involuntarily begin to wonder why it is so expensive, what makes up the tariff, and how often it increases.Every time we pay utility bills, we involuntarily begin to wonder why it is so expensive, what makes up the tariff, and how often it increases.
- How many natural monopolies are there in Kazakhstan?
- Currently, more than 1,200 natural monopoly entities (hereinafter referred to as SEM) operate in the areas of natural monopolies, of which 788 are low-power SEM. SEM provide about 2000 regulated services: transmission of electric energy; water supply and sanitation; production, transmission, distribution and supply of thermal energy; transportation of oil or petroleum products through main pipelines; storage, transportation of commercial gas through connecting, main gas pipelines or gas distribution systems; main railway networks, access roads and ports.
- Which region has the most of them?
- The largest number of subjects in Almaty region (137 SEM), Karaganda region (127 SEM), Almaty (113 SEM), East Kazakhstan region (100 SEM) and Kostanay region (92 SEM).
- What is the tariff for heating/hot water, cold water/sewerage and gas?
- The cost of the tariff for regulated SEM services is formed taking into account many factors, such as prices for materials and raw materials in unregulated sectors of the economy, for goods and services of third-party organizations, tax rates, the number of subscribers, the volume of services provided, the value of assets on the balance sheet of the enterprise, the length of networks, costs for strategic goods and more.
Thus, only economically justified costs directly related to the production and provision of regulated services of natural monopoly entities are included in the cost part of tariffs.
At the same time, depending on the strategic goods used (coal, gas, fuel oil, electric energy, purchased water, etc.) and the price of their transportation, the tariffs for SEM services for end users differ from the volume of services provided by the regions of the Republic.
In the final tariff of electricity and heat supply services, from 47% to 50% is the cost of fuel, including coal, fuel oil and gas.
Thus, the tariff for electricity supply consists of the purchase of electric energy from an energy-producing organization – 55%, 40% of the costs for the transmission of electric energy and 5% of the supply surcharge of the energy-supplying organizations.
The structure of the final price of commercial gas on average consists of 70% of the marginal wholesale price of gas, 23% of the transportation of commercial gas through gas distribution systems, 7% of the supply surcharge.
At the same time, the tariffs for electric energy of energy-producing organizations and the marginal prices of wholesale sales of commercial gas are approved by the Ministry of Energy.
- There is such a wording: "compensating tariff". What does it mean, and how many services of monopolists does it currently operate in the country?
- The authorized body annually analyzes the implementation by the subject of measures of investment programs and tariff estimates. Failure by the subject to fulfill certain obligations, for example, for modernization and development, which the subject assumed when receiving the tariff or receiving unjustified income by the subject, entails the introduction of a compensating tariff by the Committee on Regulation of Natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan (hereinafter – the Committee).
Temporary compensating tariff is a tariff approved by the authorized body for a certain period in order to refund funds to consumers. The temporary compensating tariff is approved for a year, or if a negative value is obtained when calculating the temporary compensating tariff – for up to three years.
In 2020, based on the results of the analysis of the submitted reports on the implementation of approved tariff estimates and investment programs for 2019, the Committee for non - fulfillment of obligations of the SEM took measures to introduce temporary compensating tariffs for housing and communal services totaling 14.5 billion tenge (electricity for 48 SEM, water supply - 209 SEM, sanitation - 69 SEM, heat power - 108 SEM, gas supply-4 SEM).
- How often do monopolists apply for a tariff increase?
Since 2015, the tariff policy on the adoption of maximum long-term tariffs for 5 years or more has been in effect in the areas of natural monopoly, aimed at ensuring a balance of consumer interests and the SEM.
Today, 254 SEMS operate at marginal tariffs, which provides consumers with stability and predictability of tariffs, improving the quality of services by investing in the modernization of fixed assets. Thus, as the subjects complete the validity period of the five-year tariff, the subjects apply to the Committee with applications for approval of a new level of the marginal tariff.
In 2020, due to the expiration of the previously approved tariff, the Committee reviewed and approved tariffs for regulated utilities without increasing for the population for 43 families.
At the same time, the subject has the right to apply to the Committee with an application for changing the tariff approved by the authorized body before its expiration (the procedure is determined by Article 22 of the Law of the Republic of Kazakhstan "On Natural Monopolies").
Thus, the grounds for changing the tariff approved by the authorized body before its expiration are changes in the cost of strategic goods or tariffs subject to state regulation for the transportation of strategic goods, the declaration of an emergency situation, changes in tax rates and other mandatory payments to the budget, an increase in the volume of regulated services provided, and others.
In addition, a tariff is set annually for small-capacity entities by indexing the approved tariff not higher than the inflation rate.
- In 2021, in which regions will the previously established tariffs expire and will they be revised for a new period?
In 2021, the previously approved marginal tariffs for 5 years will expire for 48 families representing public utilities to the population in 14 regions (except for Zhambyl, Kyzylorda and West Kazakhstan regions). In this regard, at the end of this year, these subjects are expected to submit applications to the Committee for approval of new marginal tariffs for 2022-2026.
The decision on these applications will be made by the Committee on the basis of the supporting materials submitted by the subjects, with mandatory discussions (public hearings) with consumers and other interested parties.
Albert Akhmetov
A source:https://www.zakon.kz/5055027-kak-budut-utverzhdat-novye-tarify-na.html