6 - Tariff Reforms

Summary

Builds on the theory of energy tariff regulation to explain the delicate balancing of investors’ and consumers’ concerns in Central Asia’s energy laws and regulations, as well as in judicial and regulatory practice in Central Asia. The social compact governing energy pricing, the negative perception of profit and popular frustration with the mismanagement of utilities makes finding the right balance between utilities and consumers’ interests one of the most significant challenges for tariff reform in general, and for reform in Central Asia in particular. Given the institutional obstacles to tariff reform, efforts to improve tariff legislation are of limited effectiveness in the absence of guarantees of enforcement of the utilities’ rights. Surprisingly, judicial practice in Central Asia (in particular in Kazakhstan) demonstrates that, in countries where the judiciary is friendly towards the government, the courts still have a key role to play in enforcing the tariff laws. This role is quite different to that usually advocated in the rule of law and market reform literature. The case of Kazakhstan illustrates how the courts can contribute to the legitimation of tariff reform by shifting the blame for tariff increases from the government onto the judiciary, thereby helping win public acquiescence in much-needed tariff reform.