We need balance in establishment of monopolies’ tariffs

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Members of Tariff Council of NCE RK "Atameken" discussed the concept of the draft law of Kazakhstan "On natural monopolies"

Deputy Chairman of the National Chamber of Entrepreneurs of Kazakhstan "Atameken" Yuliya Yakupbaeva held a meeting with the members of the Council on Tariffs to develop a consolidated position on the new edition of the Law of Kazakhstan "On natural monopolies". Opening the meeting, she noted that NCE received a lot of comments from businesses on the text of the draft law and urged those present to discuss it.

Participants, who took part in the work of the interdepartmental working group, said that, despite the many comments and suggestions, the draft law contains neither order, nor cases of new tariff methodologies, nor any criteria for decision-making by the authorized body. All norms in terms of additional methods of tariff formation - are declarative and referential, including by reason of lack of a position of an authorized body on this issue and, as a consequence, the relevant methodologies.

According to the participants of the meeting, the new version of the draft law does not solve any problems in the system of natural monopoly that has arisen since the adoption of the Law of Kazakhstan "On natural monopolies" in 1998, but also exacerbates them. In particular:

- The draft law includes provisions that meet only the interests of SNM and do not meet the goals of the draft law to achieve the balance of interests of consumers and SNM;

- An increase in the powers of the regulatory body in the absence of the law at the level of decision-making criteria, a multiple increase of reference standards and the adoption of almost all the fundamental regulatory standards at the level of regulations of the authorized body creates conditions for corruption and reduce the transparency of tariff setting process;

- The application of new methods of regulation based on the regulations of the authorized body in its absolute discretion, burdened by negative experiences of applying the method of comparative analysis of regional energy companies, not only will not have a stimulating effect on SNM, but will cause a completely opposite reactions and consequences of consumers, and SNM;

In addition, the draft law provides, along with the provision of temporary raising factor providing the raising factor, i.e. the increase in tariffs compared to the approved level at the discretion of the monopolist.

This degree of freedom is equivalent to the introduction of free pricing for the services of natural monopolies, which is unacceptable in a 100% monopoly.

Another conceptual provision, which caused the comments in the course of consideration of the draft law is the creation of an association of consumers, financed by mandatory contributions from SNM. This proposal creates an additional burden for SNM, and ultimately to consumers. At the same time there is a conflict of interest: Association financed by SNM, will not be able to protect the interests of consumers.

In addition, suggestions were made on how to address the deep problems in the sphere of regulation of natural monopolies, in particular:

- Approval of tariffs based on actual knowledge of the results of operational and investment activity of SNM;

- The transformation of a public hearing in the main and effective instrument of the tariff policy in the adversarial format.

The meeting also made by other members of the Council and representatives of the business, from the reports which the moderator Yuliya Yakupbaeva followed one common idea: the law is needed, but requires significant improvement