The Ministry of Energy proposes to change the electricity purchase tariff for distribution companies

Владислав Вислоцкий Economy
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The Ministry of Energy of the Kyrgyz Republic has proposed a change in the approach to calculating tariffs for the purchase of electricity for distribution companies. These changes are due to a shortage of electricity and an increase in import costs, which leads to financial problems in the energy sector. A draft of the amendments to the legislation has already been published for public discussion.

What exactly is being proposed?

As part of the new proposals, it is planned to establish a unified tariff for the purchase of electricity that will apply to all distribution enterprises. This tariff will be determined based on the average cost of imported electricity purchased from the main supplier, taking into account the costs of transmitting electricity through its networks.

Additionally, the document provides for a mechanism for changing tariffs in the event of a cessation of electricity imports. In such a situation, tariffs will be set at the level of the marginal tariff established for electricity producers from renewable sources.

If both imports and revenues from renewable sources are absent, the calculations of the total annual costs for each distribution enterprise will be carried out using a different methodology.

Why is this necessary?

Currently, specialists use the methodology for calculating conditional units of electrical networks for distribution companies and the method for assessing the unified specific cost of servicing and repairing these networks.

The existing rules stipulate that tariffs for purchasing electricity from the main supplier - JSC "NES Kyrgyzstan" apply to enterprises distributing up to 1 billion kWh of electricity.

However, given the growing electricity imports, there is a need to revise the existing tariff formation model. The justification note states that electricity imports from other countries have contributed to the formation of a cash deficit in the energy system.

According to the approved technical and economic indicators of energy companies for 2025, the electricity deficit in the country is approximately 3.8 billion kWh, while the expected financial deficit in the energy sector reaches 4.6 billion soms.

It is expected that the proposed changes will help stabilize the financial condition of energy companies and cover costs associated with electricity imports.

By the end of 2025, electricity consumption in the country amounted to 19 billion 94.7 million kWh, which is 859.2 million kWh (or 4.5%) more than in the same period of 2024.

At the same time, the volume of electricity generated was 15.4 billion kWh, including:

Since electricity consumption exceeds its generation, the country has to resort to imports. Last year, Kyrgyzstan purchased 3.8 billion kWh of electricity from neighboring countries.
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