“SAMRUK-ENERGY” JSC | Integrated ANNUAL REPORT

State tariff regulation of the Сompany’s lines of businesses

The laws of the Republic of Kazakhstan “On Electricity”, “On Natural Monopolies and Regulated Markets” and “On Competition” govern operations of the “Samruk-Energy” JSC group of companies subsidiaries and its joint ventures that are entities of a natural monopoly and regulated markets and entities that dominate the competitive market. Tariff regulation, depending on the type of activity of energy companies, falls within the competence of the Committee on Regulation of Natural Monopolies and Protection of Competition under the RK Ministry of National Economy or sector ministry – the Ministry of Energy.

Weighted average tariffs for electricity generation

Description

Measurement unit

2016

Actual

2017 Actual

2018 Actual

2019

Forecast

2020

Forecast

“Ekibastuz SDPP-1” LLP

tenge/kWh

7.33

6.39

6.85

6.27

6.42

Electricity tariff, kWh

 

 

 

 

5.25

5.43

Capacity tariff, thous. tenge/MW*month

 

 

 

 

590

611

“Ekibastuz SDPP-2 Plant” JSC

tenge/kWh

6.68

6.60

7.53

7.08

7.29

Electricity tariff, tenge/kWh

 

 

 

 

6.07

6.27

Capacity tariff, thous. tenge/MW*month

 

 

 

 

590

611

“Almaty Power Plants” JSC

tenge/kWh

8.60

 

 

9.90

10.87

Electricity tariff, tenge/kWh

 

 

8.60

8.60

8.89

9.20

Capacity tariff, thous. tenge/MW*month

 

 

 

 

590

980

“Shardarinsk HPP” JSC

tenge/kWh

9.50

9.50

9.50

7.35

10.92

Electricity tariff, tenge/kWh

 

 

 

 

6.52

6.74

Capacity tariff, thous. tenge/MW*month

 

 

 

 

590

3,000

“Moynak HPP” JSC

tenge/kWh

8.25

8.65

9.51

9.46

15.96

Electricity tariff, tenge/kWh

 

 

 

 

7.10

7.35

Capacity tariff, thous. tenge/MW*month

 

 

 

 

590

2,151

“Samruk-Green Energy” LLP

tenge/kWh

36.13

42.12

45.11

47.37

49.02

“First Wind Power Plant” LLP

tenge/kWh

22.68

26.44

28.31

29.73

30.77

The following tariffs were in effect during the reporting period:

  • for energy producing organizations (EPOs), after expiration of the term of ceiling tariffs established for 2009–2015, tariffs for power plants for 2016 to 2018 are maintained at the level of 2015 tariffs. Taking into account the instruction of the Government of the Republic of Kazakhstan on supporting the national economy, “Ekibastuz SDPP-1” LLP and “Ekibastuz SDPP-2 Plant” JSC have sold electricity at tariffs not exceeding 8.42 KZT/kWh during 2017 and up to the present time. Actual tariffs of 1st group EPO, which includes subsidiaries such as “Ekibastuz SDPP-1” LLP and “Ekibastuz SDPP-2 Plant” JSC, are way below than those approved because of electricity sales in centralized auction and electricity exports to the Russian Federation.

The average weighted tariff of “Ekibastuz SDPP-1” LLP for 2018 was 6.85 KZT / kWh, which is lower than 2017 level (6.85 KZT / kWh) by 0.46 KZT / kWh. The weighted average tariff was reduced because of electricity sales at centralized auction at market prices.

The average weighted tariff of “Ekibastuz SDPP-2” JSC for 2018 was 7.53 tenge / kWh, which is higher than 2017 level (6.60 tenge / kWh) by 0.93 tenge / kWh. The weighted average tariff was reduced as a result of electricity sales at centralized auction.

The individual and estimated tariffs in the amount of 9.50 KZT/kWh were approved for “Moynak HPP” JSC and “Shardarinsk HPP” JSC taking into account the implementation of large-scale investment programs, however the actual tariffs of “Moynak HPP” JSC for 2017 and 2018 were below approved, due to the sale of part of electricity through centralized auction.

The Capacity market was introduced in 2019 based on the Concept of Development of the Fuel and Energy Sector of Kazakhstan until 2030, which was adopted in 2014. The introduction of a capacity market changes the structure of tariffs for energy producing organizations. Ceiling electricity tariffs for EPO (for 43 groups) were approved, and a single ceiling tariff for all EPO in the amount of 590 thousand tenge/MW* month was approved for the service for maintaining the availability of capacity. Tariffs were approved for 2019–2025. However, the approved tariffs do not provide for profitability and indexation by years. At the same time, in accordance with paragraph 2 of Article 12-1 of the RK Law “On Power Industry”, electricity tariffs are adjusted annually when needed. Because the approved ceiling tariff for electricity does not cover all the expenses of the Company, management plans to adjust the tariff from 2020 in accordance with the specified methodology. From 2021 and onwards tariffs are forecasted relying upon on consumer price index. In addition, it is planned to receive an individual capacity tariff from 2020 for “Moynak HPP” JSC, “Almaty Power Plants” JSC and “Shardarinsk HPP” JSC.

Tariffs for the supply of electricity, which is produced by entities using renewable energy sources, are set and approved by the resolution of the RK Government depending on renewable energy technology (separately for wind, solar and other sources) and are subject to annual indexation.

Tariffs for heat production

Company name

Measurement unit

2016

Actual

2017 Actual

2018 Actual

2019

Forecast

2020

Forecast

“Almaty Power Plants” JSC

tenge/Gcal

2,872

3,363

3,917

3,871

3,869

“Ekibastuz SDPP-2 Plant” JSC

tenge/Gcal

683

740

816

831

849

“Ekibastuz SDPP-1” LLP

tenge/Gcal

352

446

555

555

The legislation envisages the approval of long-term (5+ years) ceiling tariff levels for organizations producing heat, with the inclusion of the investment component and annual cost indexation. The Committee for the Regulation of Natural Monopolies and the Protection of Competition approves ceiling tariffs. However, an increase in tariffs is made no more than once a year and there are risks that tariffs remain unincreased in case a power plant’s costs grow for objective reasons.

Tariffs for electricity transmission services

Company name

Measurement unit

2016

Actual

2017

Actual

2018 Actual

2019

Forecast

2020

Forecast

“Alatau Zharyk Company” JSC

tenge/kWh

5.35

5.83

5.89

5.53

5.95

Approved ceiling long-term tariffs based on tariff estimates with investment component for 2016–2020 for regional power transmission companies (RPTC) are adjusted by the authorized body when necessary. However, tariffs are increased no more than once a year, in the event of an increase in expenses of PDZ (power distribution zones) due to objective reasons (recognition of ownerless power grids and equipment. etc.). Risks that tariffs remain unincreased are also available.

Tariffs for selling electricity by ESO

Company name

Measurement unit

2016

Actual

2017

Actual

2018 Actual

2019

Forecast

2020

Forecast

“AlmatyEnergoSbyt” LLP

tenge/kWh

15.66

16.38

16.42

16.68

17.65

Energy supplying organizations are also subject to monopoly regulation. The tariff calculation includes operating, financial and investment components. There are risks that the Regulator may artificially restrain the growth of tariffs in order to maintain the social stability of the population in regions. In 2017, taking into account changes in legislation. ESO cancelled differentiated tariffs for the zones of the day. Differentiation for individuals according to consumption rates was preserved, electricity to corporate entities is supplied according to average selling tariffs.

Tariffs for coal mining

Company name

Measurement unit

2016

Actual

2017

Actual

2018

Actual

2019 Forecast

2020 Forecast

“Bogatyr Komir” LLP

tenge/tons

1,779

1,944

2,013

2,019

2,081

Coal mining tariffs of “Bogatyr Komir” LLP are approved independently by a price list for the RK consumers for 3 consumer groups (power sector at KTZh connecting station, power sector at the coal collecting station, public utility needs). Regulation is performed on the basis of the Entrepreneur Code of CRNM PC under MNE.