Contributed By Haller Lomax LLP
The electric power industry in the Republic of Kazakhstan (“Kazakhstan”) includes the generation, transmission, supply and consumption of electrical energy. The power industry is structured with separate entities and characterised by a combination of bundled and unbundled structures, as well as a mix of state-owned and private investor-owned entities.
Key Power Industry Laws
Law on Electric Power Industry No 588-II dated 9 July 2004 (the “Electric Power Industry Law”)
The law defines the aims and objectives of state regulation and control, the powers and competencies of the government, state authorities and the Kazakhstan Electricity Grid Operating Company JSC (KEGOC), and stipulates the rights and responsibilities of electricity generation, transmission and supply companies and consumers.
Law on Natural Monopolies No 204-VI dated 27 December 2018
This law governs the activities of natural monopolies, including the transmission of electricity and generation, transmission, distribution and (or) supply of thermal energy. It establishes the legal basis for regulating tariffs, ensuring fair competition, and protecting the interests of consumers in relation to monopolistic activities.
Law on Energy Saving and Energy Efficiency No 541-IV dated 13 January 2012
This law aims to promote energy conservation and efficiency and sets out measures and requirements for energy efficiency programmes, energy audits, energy management systems, and energy-saving technologies in the power sector.
Law on Supporting the Use of Renewable Energy Sources No 165-IV dated 4 July 2009 (the “Law on Support on RES”)
This law focuses on the development, promotion and use of renewable energy sources (RES). It provides the legal framework for the support mechanisms, incentives and regulations related to RES generation and integration into the power system.
Law on Public-Private Partnership No 379-V dated 31 October 2015 (the “Law on PPP”) and Law No 167-III dated 7 July 2006 “On Concessions” (the “Law on Concessions”)
It sets out the procedures, rights and obligations of public and private entities involved in the development, financing, construction and operation of power projects through a public-private partnership (PPP) model and concession projects.
The authors of this guide are currently involved in the project group that aims to consolidate the laws related to PPP and concessions into a single framework. Unified legislation should be introduced soon.
The following is a general overview of the principal state-owned or investor-owned entities in the Kazakhstan power industry.
Kazakhstan has taken steps to attract foreign investment in various sectors, including the power industry, and there are no specific restrictions on foreign investment in the power industry. Issues of state support for investments are regulated by the Ministry of Foreign Affairs.
The Entrepreneur Code No 375-V dated 29 October 2015 (the “Entrepreneur Code”) governs investment activities and provides a legal framework for both domestic and foreign investors. It guarantees equal treatment of foreign and domestic investors, protection of property rights, the right to repatriate profits, and protection of foreign investors from uncompensated expropriation and requisition.
Investment Projects and Preferences
Investment project
Investment priority project
Special investment project
Investment agreement
This is a new tool for large investment projects – at least 7.5 million MCI (approx. USD57,628,062), which provide preferences in agreement with the government, such as: stability of legislation up to 25 years, reduction of CIT by 100% for ten years, application of co-efficient 0 when calculating land tax for ten years and property tax for eight years, exemption for the sale of goods, works and services from VAT in the territory of a special economic zone and reduction of tax liabilities up to 20%.
Investment agreements for modernisation, expansion, reconstruction, and/or renewal
These are concluded only in relation to the main generating equipment of existing electric stations operated by energy-generating organisations.
Investment agreements for the modernisation, reconstruction, and/or expansion of existing power plants with the construction of generating units using gas as an alternative fuel
These are only concluded with operational (existing) power stations of active energy-generating organisations located in cities of republican significance.
BITs and International Agreements
Bilateral investment treaties and international agreements that Kazakhstan has entered into with foreign countries may provide additional protections for foreign investors, such as dispute resolution, repatriation of profits, and protection against expropriation. For instance, Kazakhstan has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards by Presidential Decree dated 4 October 1995. In the same year, it ratified the European Convention on International Commercial Arbitration, and, since 21 October 2000, the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). Later, by Decree No 2537 of the President on 18 October 1995, Kazakhstan ratified the Treaty to the Energy Charter and the Protocol to the Energy Charter concerning energy efficiency and related environmental aspects. By ratifying it, Kazakhstan demonstrates a commitment to participating in international energy co-operation and creating a secure, predictable environment conducive to attracting foreign energy investments to the country.
Expropriation
Under the civil legislation of Kazakhstan, the concept of forcible alienation of property, which can be considered a form of expropriation, encompasses the practice of nationalisation. Nationalisation of strategic assets (the national power grid and power generation facilities with a capacity of at least 50 MW) can be carried out in accordance with Law No 413-IV dated 1 March 2011 “On State Property” (the “Law on State Property”). Nationalisation may be conducted in the public interest to ensure national security and only in an exceptional case of alienation of property owned by individuals and non-governmental legal entities. It is implemented only after all other possible forms of alienation of property have been exhausted. The amount of compensation paid to the owner of the nationalised property is determined based on the market value of the property and should be compensated in full.
Subsidies
The following subsidies occur:
Sale and Transactions of Strategic Assets
The national power grid, power generation facilities with a capacity of at least 50 MW, as well as shareholdings (participation interests, stakes) in legal entities and individuals and legal entities that have the ability to directly or indirectly determine decisions or exert influence on the decisions, are considered as strategic assets.
The transfer of rights or the imposition of restrictions on strategic assets by third parties is subject to approval by the government, based on the sector-specific opinion of the MoE and in co-ordination with national security agencies.
Kazakhstan has a priority right to acquire the strategic asset in cases where a citizen or non-governmental legal entity intends to enter into a transaction for the alienation of a strategic asset, as well as in cases of enforcement proceedings on a strategic asset or alienation of a strategic asset by a rehabilitation or bankruptcy manager, or realisation of pledged property (strategic asset) by a pledgeholder through extrajudicial procedures, or enforcement proceedings on a strategic asset based on a court decision.
Sale and Transactions of Natural Monopoly Entity Asset
A natural monopoly entity refers to an individual entrepreneur/legal entity that provides services, such as:
According to the Article 13.1 2 of the Law on Natural Monopolies, a natural monopoly entity is required to obtain the consent of the Ministry of National Economy (MNE) for:
The sale, lease or trust management of power facilities and/or their separate parts is carried out with prior notification to the MoE and Committee for Regulation of Natural Monopolies (MNE). A power facility refers to the property of power generation and power transmission organisations that is directly used in the process of electricity production, conversion, transformation, transmission, and/or conversion into other forms of energy.
The MNE adopted Decree No 73 dated 13 August 2019, which outlines procedures for public hearings, procurement guidelines, setting KPIs related to quality, reliability and efficiency, as well as rules for their approval and monitoring. The rules also specify the reporting requirements and processes that natural monopoly companies need to adhere to, including the use of regulatory reporting templates.
The following is a general overview of the Central Planning Authorities of Kazakhstan.
Kazakhstan has implemented measures to broaden its energy portfolio and enhance the proportion of RES. It has established supportive frameworks, such as feed-in tariffs and auctions, to encourage the growth of renewable energy projects. These mechanisms are designed to stimulate investments in renewable energy generation and progressively decrease dependence on carbon-based power generation in the future.
The implementation of the RES auction mechanism in Kazakhstan was introduced through Law No 89-VI LRK on 7 November 2017. Alongside this, the Law on Support on RES incorporated requirements for conducting auctions. The primary objective of this mechanism is to select RE projects with the lowest costs and establish competitive market prices for RES.
To facilitate the RES auctions, the MoE issued Order No 280 on 7 August 2017, designating KOREM’s electronic trading platform as the platform for conducting these auctions. According to the information provided by KOREM, over the five years 54 RES auctions were held for a total installed capacity of 2,395 MW.
Kazakhstan is in the process of drafting new legislation focused on the advancement of alternative energy. This forthcoming law aims to encompass various sources, including hydrogen, industrial gases, methane from coal-bed gas, biomass and bioenergy, and the utilisation of municipal solid waste.
Moreover, a law on thermal power engineering is being developed at the Majilis, which will regulate social relations arising in the process of generation, transmission, supply and consumption of thermal energy for communal and industrial needs, creation, operation, development of heat supply systems and state regulation in the field of thermal power engineering.
In addition to the above, the Majilis is developing amendments to support the use of RES, the electric power industry and natural monopolies. In particular, for the development of RES, the obligation of energy supplying organisations to purchase energy from net consumers is fixed, goods intended for the construction and operation of renewable energy facilities will be exempt from customs duties, etc.
In contrast to countries like the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan, Kazakhstan implements the following regulatory measures in the energy sector: Monitoring Regulation; Dispute Resolution Procedure; and Technical and Quality of Service Regulation.
Due to geographical factors, the vast territory, and diverse landscapes, it is technically and economically advantageous to supplement and balance the electric power supply in Kazakhstan by importing electricity from neighbouring countries. This approach takes into consideration the specific requirements and conditions of different regions within Kazakhstan, which are divided into North, South, East and West.
Notably, the infrastructure of the power transmission networks may vary across these regions, and there is currently a gap in the electricity system, particularly in the western part where it is not connected to the main grid. To ensure a reliable power supply, Kazakhstan engages in the practice of buying and selling electricity with neighbouring countries.
The WEM in Kazakhstan operates under a structure known as the “single buyer” model. Step 50 of the Plan of the Nation – 100 Concrete Steps Program provides for the Single Buyer market model. From 1 July 2023, the Financial Settlement Centre of the MoE has been appointed as the Single Buyer.
The WEM consists of:
Except for the export of electrical energy, an energy-producing organisation is prohibited from selling electricity to individuals or legal entities who are not participants of the WEM and/or retail market.
Wholesale Price of Electricity
The wholesale price of electricity is determined through a combination of competitive offers among generators and price regulation. Under Electric Power Industry Law and Order of the MoE No 147 dated 27 February 2015, energy suppliers (excluding RES) must sell electricity at tariffs that are within the maximum tariffs set for their specific groups (47) of energy suppliers. These maximum tariffs are established annually for a seven-year regulatory period and can be adjusted if necessary.
The maximum tariffs are based on the maximum production costs for generating the maximum amount of energy. Any excess amount above the maximum tariff should be refunded to the participants of the WEM and/or retail market, with the refund not exceeding 10% of the total generated electric energy.
Administrative Liability
The sale of electrical energy exceeding the approved selling price on the balancing market, for export, and to digital miners within the established quotas, results in a penalty of 10% of the income (revenue). The sale by an energy-producing organisation to individuals and legal entities who are not subjects of the wholesale and/or retail market, leads to a penalty of 100% of the income (revenue). The unlawful acquisition (purchase) of electrical energy by an energy-producing organisation from another energy-producing organisation results in a penalty of 100% of the payment amount for the acquired (purchased) electrical energy.
The export is conducted at a price that is equal to or higher than the production cost of the exported electricity, but only when there is an excess of electricity, while the import occurs solely when there is a shortage of electrical energy in the UPS. Kazakhstan is a member of the Central Asia Power System (CAPS), which is a regional power system that integrates the electricity grids of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. CAPS enables the exchange of electricity among these countries, allowing for imports and exports of power. Furthermore, Kazakhstan has established power transmission lines that interconnect with Russia, China and neighbouring countries, facilitating cross-border electricity trading. The export and import of electric energy in Kazakhstan adhere to the regulations set forth in the country’s customs legislation, unless there are specific provisions outlined in a ratified international treaty that Kazakhstan is a party to.
Kazakhstan’s electricity supply mix consists of various energy sources:
Market Concentration Limits
The principal law that governs market concentration limits is the Entrepreneur Code. To prevent the emergence of a monopoly position and/or the restriction of competition, it is necessary for market entities to obtain prior approval from the Agency on Competition in order to carry out the following transactions (actions):
Notification to the Agency on Competition should be submitted no later than 45 calendar days in the following cases:
Consent and notification are only required if the aggregate book value of assets of the reorganising market entities and the market entity whose shares (participation interests in the authorised capital, units) are being acquired, or their total volume of goods sold in the previous financial year, exceeds 10 million MCI (approx. USD76,837,416 in 2023).
Economic concentration conducted without consent, leading to the establishment of a monopoly position, or the restriction of competition, can be deemed invalid by a court. Similarly, state registration or re-registration of a market entity, as well as the registration of rights to immovable property, carried out in violation of market concentration limits, may be declared unlawful and subsequently revoked.
To prevent violations of competition legislation, the Agency on Competition carries out regulation of economic concentration, analysis of the state of competition monitoring of prices and in product markets and is entitled to:
According to Article 159.1 and 159.2 of the Code on Administrative Offences No 235-V dated 5 July 2014 (the “Administrative Code”), the following penalties are applied in violations of the Entrepreneur Code and the conclusion of prohibited anti-competitive agreements and co-ordinated actions: a fine from 3% to 5% of the income (revenue) derived from monopolistic activities, depending on the business size; and the monopolistic income obtained by businesses is also confiscated but cannot exceed one year’s income.
Under Article 161 of the Administrative Code, failure by market participants to obtain the consent for economic concentration of the Agency on Competition, as well as non-compliance with the requirements and obligations, and failure or delayed submission of a notification results in fines from 80 MCI (approx. USD615) to 1,600 MCI (approx. USD12,294), depending on the business size.
Climate Change Law and Policy
Kazakhstan ratified the Paris Agreement on 4 November 2016, which imposes an obligation to reduce greenhouse gas emissions. Hence, the Environmental Code No 212-III dated 2 January 2021 (the “Environmental Code”), includes Chapter 20, which specifically addresses the state’s regulation of greenhouse gas emissions and removals. The government has enacted a range of strategic plans that define important priorities and quantifiable targets for the country’s advancement.
Strategic Development Plan 2050
This includes targets for reducing greenhouse gas emissions, improving energy efficiency, and increasing the share of RES in the energy mix. The document highlights the significance of advancing alternative energy generation and expanding the utilisation of solar and wind energy technologies, while still maintaining a prominent position in the hydrocarbon crude market.
Concept for transition to “green economy”
The concept was adopted on 30 May 2013 by Decree No 577 of the President. To implement the concept, key infrastructure and generation technologies must be modernised using energy-efficient solutions. Assuming there is no alteration in coal production, the concept sets forth ambitious targets for the proportion of alternative energy: 30% by 2030 and 50% by 2050.
National project “Green Kazakhstan”
The project was adopted on 12 October 2021 by Resolution No 731 of the government. As outlined in Task 2 “Improving Energy Efficiency”, there is a plan to decrease the specific electricity consumption for product manufacturing in key sectors such as non-ferrous and ferrous metallurgy, and the chemical industry.
The concept of Kazakhstan’s entry into the 30 most developed countries in the world
This was adopted by Decree No 732 of the President dated 17 January 2014. The concept defines increasing the share of RES and alternative energy generation to 50% of the total electricity generation by 2050.
Plan of the Nation – 100 Concrete Steps
The President adopted this programme on 20 May 2015 that provides for 100 steps, highlighting the importance of attracting strategic investors in energy saving and energy efficiency through the internationally recognised mechanism of energy service contracts.
The Development Plan for the Hydropower Industry 2020–30
This was adopted on 4 September 2020 and is aimed at ensuring energy security through the development of the hydropower industry. It indicates a list of activities, as well as responsible performers, the form of completion, terms, sources and the amount of funding, among others, for the construction of new HPPs, improvement of legislation and the model of the hydropower functioning market.
Strategy (doctrine) for achieving carbon neutrality by 2060
This was adopted by Decree of the President No 121 dated 2 February 2023. The medium-term goal is to reduce greenhouse gas emissions by 15% by 2030 compared to 1990 and bring the reduction to 25%, subject to receipt of international support for the decarbonisation of the economy (conditional goal).
While specific regulations on the early retirement of carbon-based generations are not available, Kazakhstan has expressed its commitment to gradually reducing coal-based generation. It has implemented the various above-mentioned regulations and policies to encourage the transition from carbon-based generation, including coal, to cleaner and more sustainable energy sources such as RES. Moreover, the electricity industry is subject to Carbon Quota Allocation in Kazakhstan. A quota-regulated facility is defined as a facility with an annual greenhouse gas emissions volume exceeding 20,000 tons of carbon dioxide.
To attract private investments in the RES, the Law on Support of RES provides the following support measures:
To support the development of alternative energy sources, Kazakhstan has been working on enhancing the transmission and distribution infrastructure. This includes the construction of new transmission lines and substations to ensure the efficient and reliable integration of renewable energy into the grid.
The principal laws in Kazakhstan governing the construction and operation of generation facilities are based on the following:
The construction and operation shall be performed in accordance with the following documents: design documentation; detailed design documents; work organisation plan; project execution plan; construction organisation plan; and current industry standards/rules of Kazakhstan.
In Kazakhstan, depending on balance of electrical capacity, tenders and auctions are provided for construction of new generation facilities. Brief information on terms and conditions is provided below.
Tender for the Construction of Newly Generating Facilities
If a projected uncovered deficit of electrical capacity is identified for the upcoming seven-year period in the UPS during the first five years of the forecast exceeds 100 MW, the authorised body conducts a tender for the construction of generating facilities to be newly commissioned, with a capacity sufficient to cover the projected deficit.
The winner should sign the agreement within ten business days. Within 45 calendar days from the announcement of the tender results, the authorised body concludes an agreement, which specifies the deadline for commissioning the generating facilities and establishes the responsibility for non-performance or improper fulfilment of the obligations.
Auctions
If the forecast balance of electrical energy and capacity for the next seven years shows an anticipated shortage of regulating electrical capacity exceeding 100 MW in the UPS during the last three years of the forecast, the authorised body considers the volumes of introduced capacity in the plan for placing generating units with manoeuvrable generation mode.
The selection of projects for the construction of newly commissioned generation facilities with manoeuvrable generation mode is carried out through the organisation and conduct of auction bidding. The authorised body includes the winner of the auction in the list of power plants and within 15 calendar days sends the draft of the power purchase agreement.
Within 30 calendar days the winner signs the agreement at an individual tariff for the service of maintaining the readiness of electric power. The tariff is determined based on the auction bidding results and the agreement is signed for a period of 15 years.
Registration of Ownership Rights
The following steps are mandatory for registration of title to a completed project:
Any rights to immovable property for more than one year are subject to registration.
Land plots can be either owned or used, on a permanent or temporary basis. According to the Article 84.2(4) of the Land Code, a land plot can be compulsorily expropriated for the construction (reconstruction) of power system generations, provided that the owner or non-state land user receives equivalent compensation and gives consent, or by a court decision.
Expropriation of irrigated agricultural land, land of experimental fields of agricultural, biological, irrigation and land reclamation, fish farming institutions, as well as land from the forest and water reserves, is allowed in exceptional cases as to the construction of generations for the use of RES, construction power transmission lines, communication lines, and major pipelines when there are no other alternative options for their placement.
If a land user has redeemed the right to use a land plot granted for state needs, compulsory alienation of the land plot will include compensation for the redemption cost. Upon request, an alternative land plot may be provided. If the land user has not redeemed the granted right, an alternative land plot may be provided in accordance with the Land Code. Full compensation for damages to the land user is provided.
The Electric Power Industry Law does not directly specify the requirements for decommissioning generation facilities. However, under Environmental Code, as part of the remediation of the environmental impact caused by power industry plants, measures must be taken to restore land plots to a state ensuring the safety of human life and health, environmental protection, and their suitability.
The specific procedures for decommissioning construction facilities, closing hydrogeological wells, landfill closure, waste management, and other activities in the nuclear energy sector are determined by the legislation of Kazakhstan.
Financial Assurance
The remediation of the environmental impact caused by facilities (category I) is carried out at the expense of the entity that is the operator of such a facility at the time of its decommissioning. This is intended to ensure that funds are available to cover the costs of decommissioning when the facility reaches the end of its physical or economic life.
The principal laws that regulate construction and operation of transmission lines include the Electric Power Industry Law, the Environmental Code and the Construction Law. Please see 5.2 Obtaining Approvals for the Construction and Operation of Transmission Lines and Associated Facilities for details concerning regulation on environmental reviews.
Power transmission lines can be owned by both the state and private entities and are subject to registration with the judicial authorities. Inter-regional and/or interstate power transmission lines, substations, and distribution devices with a voltage of 220 kV and above, which are part of the UPS, are owned and operated by the state (KEGOC) from the moment of their creation.
The national electric grid in Kazakhstan is not subject to privatisation. Regional-level power grids provide electrical connections within regions and transmit electricity to retail consumers, and are owned and operated by regional power grid companies.
Sales and Transactions of Power Transmission Assets
The owner of electric networks that provide electricity transmission services has the right to sell, transfer on a gratuitous basis to or place under the trusteeship of a power transmission organisation, the electric networks to which they are directly connected.
Power transmission organisations must comply with the requirements for electricity transmission activities, which include the following:
According to the Environmental Code, the construction of overhead transmission lines with a voltage of 220 kV or more and a length exceeding 15 km is classified as an activity that requires an Environmental Impact Assessment (EIA).
Overhead transmission lines with a voltage of 110 kV or higher are included in the list of activities and objects that require the mandatory screening procedure for assessing the impact of planned activities. The screening procedure is conducted to determine whether a full EIA is required for the specific project.
The EIA process involves evaluating the potential environmental effects of the project and proposing measures to mitigate or minimise those impacts. The EIA requires public participation, including via public hearings. The EIA process is regulated by the Ministry of Ecology and Natural Resources, which issues EIA conclusions that shall be the basis for further design and construction of electric transmission lines.
Design documentation for the construction of transmission lines shall require expert examination of a specialised expert organisation (Gosexpertiza). Pursuant to Order of MoE No 210 dated 18 December 2014 “On Approval of the Electric Grid Rules”, the design and construction of duplicating (shunt) power transmission lines and substations are carried out with prior notification and approval with akimats (local administrations), MNE, CRNM and the KEGOC in the following manner:
According to the Law on Permits, main transmission lines with voltage up to 35 kV and up to 110 kV and above can be constructed by a company that has a licence for special construction and installation works, including major repairs and reconstruction.
The design and construction of duplicate (shunt) power transmission lines and substations could be in the increase in electrical power consumption by the consumer.
Moreover, an energy generating organisation and a consumer belonging to the same group of individuals have the right to jointly or independently design, construct and operate their own power transmission lines with a voltage of 220 kV and above, provided that the electrical energy transmitted through such lines will be used for consumption within the said group of individuals within the administrative-territorial unit. They must also comply with the technical requirements determined by KEGOC to ensure the reliability of the operation of the UPS. These power transmission lines are owned by those individuals and cannot be transferred to the national company without their consent.
Public servitudes can be established without expropriating land plots. This can be done to meet the needs of the state and local population. Public servitudes are established for the purpose of using land plots for the installation and operation of electrical and other lines and networks.
The granting of rights to land plots is regulated by Article 43, while the construction and operation of heat networks are governed by Article 44 of the Land Code.
Under Article 84.2(4) of the Land Code, a land plot can be compulsorily expropriated for the construction (reconstruction) of power transmission lines and communication lines, provided that the owner or non-state land user receives equivalent compensation and gives consent, or by a court decision.
For details on expropriation and compensation, please see 4.4. Eminent Domain, Condemnation or Expropriation Rights.
Transmission of electrical energy and production, transmission, supply of thermal energy, and power plants belong to the sphere of natural monopoly. The process of connecting to the power supply networks consists of the following stages (excluding installed capacity up to 200 kV):
As mentioned, legislation in Kazakhstan provides for the design and construction of duplicating (shunt) power transmission lines and substations. This process is carried out with prior notification and approval.
Regional power grid companies perform the function of electricity transmission through the electrical networks within their balance responsibility division and if the power transmission organisation or network user plans to install new electrical installations at the boundary of the balance responsibility division, they notify, no later than eight months before the planned installation, other adjacent network users about the proposed identification of the electrical installations.
The CRNM has authority to implement a tariff policy for regulating natural monopolies. As per MNE Order No 90 dated 19 November 2019, the Rules for setting tariffs apply to electricity transmission, technical dispatching, and production-consumption balancing services. The tariff for electricity transmission services through the national electricity grid is applicable to consumers engaged in transmitting electricity, including transit and exported electricity.
When setting tariffs for natural monopolies, several methods are considered, including cost recovery, stimulating tariffs, indexation, and tariffs based on PPP or concession contracts. The MNE has 90 business days to review tariff applications. In cases where public hearings are needed, draft tariffs and tariff structures must be made accessible to the public.
1. Tariff for regulated services related to the production, transmission, distribution, and supply of thermal energy as a whole is calculated using the following formula:
T=(Z+P)/Q
where:
2. Tariff for the transmission, distribution, and supply of thermal energy as a whole is calculated as follows:
T=(T+(Z+P))/Q
where:
3. When approving the tariff for regulated services related to thermal energy supply, or if separate tariffs for regulated services related to production, transmission, distribution, and supply of thermal energy are approved for the entity, the tariff is calculated using the following formula:
T=(T(prod.)+T(transm.)+(Z+P))/Q
where:
KOREM ensures equal conditions for the access of subjects of the WEM to the market for centralised trading in electricity. Moreover, contracts concluded by energy supply and energy transmission organisations in the retail market are required to contain equal conditions for all participants in the retail market of electrical and thermal energy.
Prices and conditions for the supply of electrical energy by energy supply organisations are determined in accordance with the sales contract by mutual agreement of the parties, taking into account the tariff set by the energy transmission organisation.
The principal laws governing the construction and operation of electric distribution facilities are the Electric Power Industry Law and the Construction Law. In addition, there are a several ministerial Orders regulating the construction of electricity facilities. For details, please see 5.1. Regulation of the Construction and Operation of Transmission Lines and Associated Facilities.
In general, considering interconnectedness of transmission and distribution activities under the Kazakhstan legislation, regulatory processes for obtaining all approvals necessary to construct and operate electric distribution facilities are identical.
Based on the Law on Permits, the distribution is not licensed activity. In the energy sector, licensing activity is only the purchase of electricity for energy supply. Licence is defined as “a permit of the first category issued by the licensor to an individual or legal entity to perform a licensed activity associated with high risk”.
As mentioned above, in Kazakhstan, the transmission of electrical energy refers to technologically interconnected actions aimed at transmitting and/or distributing electrical energy through electrical networks. Given their connection, terms and conditions imposed in approvals for the construction and operation of electricity distribution facilities are identical with transmission lines.
In general, given the technological interconnectedness of transmission and distribution activities under the legislation in Kazakhstan, these issues in relation to the construction and operation of electricity distribution facilities are identical to those in relation to transmission.
The Law on Natural Monopolies identifies that the distribution of thermal energy is considered to be a natural monopoly. As mentioned above, the transmission of electrical energy in Kazakhstan involves a series of interconnected technological processes as transmitting and distributing electrical energy through electrical networks. Hence, please see 5.5 Monopoly Rights to Provide Transmission Services for details.
In Kazakhstan, the transmission of electrical energy refers to technologically interconnected actions as transmitting and/or distributing electrical energy through electrical networks. Please see 5.6 Transmission Charges and Terms of Service for details on regulation.
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