The Republic of Kazakhstan Law “On making changes and additions to certain acts of the Republic of Kazakhstan on power industry matters” (hereinafter – the Law) was signed on November 12, 2015. The law was developed by the Ministry of Energy of the Republic of Kazakhstan with the participation of the Kazakhstan Electricity Association, the National Chamber of Entrepreneurs of the Republic of Kazakhstan, KAZENERGY association and energy enterprises in order to implement the 50-th and 52-nd steps of the National Plan “100 concrete steps to implement five institutional reforms” as well as approved Concept for Development of fuel and energy sector of the Republic of Kazakhstan until 2030.
According to amendments, the Unified Buyer model with operation of capacity market will be introduced from January 1, 2019. Its aims to create favorable conditions for attracting investments in power industry, building new generating facilities in an amount sufficient to satisfy the demand for electricity, maintain the required level of power supply reliability and development export potential of the industry.
The model assumes the operation of electricity and capacity centralized trade markets (the Unified Buyer purchases services associated with capacity on a centralized basis), a balancing market and decentralized electricity trade market, which enable to execute bilateral contracts for purchase and sale of electricity between producers and consumers.
Tariffs of energy producing organizations will be divided into 2 components: the tariff for electricity and the tariff for maintaining the availability of capacity. Tariffs for electricity will include variable operating costs. Tariffs for maintaining the availability of capacity will include investment costs. Tariffs are planned to be adjusted annually so as to take into account the need to ensure the investment attractiveness of the industry.
According to the Law, the Market Council was established on January 1, 2016, which monitors the operation of electricity and capacity market. “Kazakhstan Electricity Association” ULE was appointed Market Council.
In order to implement provisions of the Law, the Rules for operation of the Market Council were approved by the Order of the Minister of Energy of the Republic of Kazakhstan dated December 3, 2015 No. 682, in accordance with which the Market Council performs the following functions:
- Monitors the operation of electricity and capacity market;
- Reviews investment programs;
- Submits proposals on improvement of the RK legislation on power industry to the authorized body.
- Performs other functions determined by the authorized body.