Power industry is regulated by government agencies.

The authorized body represented by the Ministry of Energy of the Republic of Kazakhstan manages power industry on the basis of the Republic of Kazakhstan Law No. 588 dated July 9, 2004 “On Power Industry”.

The authorized body represented by the Ministry of Energy of the Republic of Kazakhstan manages renewable energy sources area on the basis of the Law of the Republic of Kazakhstan
No. 165-IV dated July 4, 2009 “On Supporting the Use of Renewable Energy Sources”.

The state body represented by the Committee for Regulation of Natural Monopolies, Protection of Competition and Consumer Rights of the Ministry of National Economy of the Republic of Kazakhstan implements the state policy in the areas of natural monopolies, including on regulated services for electricity transmission, heat production, transmission, distribution and supply in line with the Republic of Kazakhstan Law dated December 27, 2018 No. 204-VI “On Natural Monopolies”.

The Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan is the state agency that manages coal industry in accordance with the Republic of Kazakhstan Code No. 125-VI dated December 27, 2017 “On subsurface and subsurface use”.

Along with electricity market, the electric capacity market has started operating since January 1, 2019; the capacity market aims to attracting investments to maintain existing and commissioning of new electric capacities to cover the demand for electricity.

ELECTRICITY AND COAL MARKET MODEL

Attracting investments for the modernization, expansion of existing capacities and construction of new power plants is provided under long-term contracts, attracting investments to cover current costs is provided as part of a competitive selection through centralized capacity auctions.

With the introduction of the capacity market, the existing electricity tariff was divided into two components:

  • electricity tariff – a variable part, which is formed on the basis of the costs for the production of electricity by energy-producing organizations (including depreciation, interest on loans), taking into account the rate of return;
  • capacity tariff – a constant part that will ensure the return on investment in the construction of new and renovation, modernization, reconstruction, expansion of existing electrical capacities.

The electricity market will retain the possibility of concluding direct bilateral contracts for the purchase and sale of electricity, as well as the purchase and sale of electricity at centralized auctions. At the same time, in accordance with paragraph 2 of Article 12-1 of the Law “On the Electric Power Industry”, electricity production is in a competitive environment, and energy-producing organizations independently determine the selling price within the marginal tariff of the corresponding group.

Capacity is purchased by the Single Purchaser at the level of the maximum annual power consumption of the UES of Kazakhstan, considering the required power reserve.

A single purchaser sells capacity to all wholesale buyers (power transmission, power supply organizations and wholesale consumers) at a single, averaged price. This mechanism will smooth out different capacity prices for power generating organizations, since the investment needs of existing power generating organizations are less than for new power plants commissioned because of a tender for the construction of power plants.