Georgia's Energy Regulator Gets Right to Set Tiered Tariffs for Natural Gas and Water

Parliament, in the third reading, granted the Georgian National Energy and Water Supply Regulatory Commission (GNERC) the right to introduce tiered tariffs for natural gas and water. The regulator is to deliberate on the new tariffs in December.

According to the chairman of GNERC, Davit Narmania, gas and water tariffs will be reviewed in December. The change will not affect electricity, the cost of which per kWh rose by 5 tetri from April. By tier, this increase meant a 21% price rise for some subscribers, 26% for others, and 33% for others still.

A three-tier tariff already applies to electricity for household consumers. In Tbilisi, at consumption of 0-100 kWh per month, the price of 1 kWh is 20 tetri, at 101-300 kWh it is 24 tetri, and at 301+ kWh it is 28.5 tetri. In the regions the situation is almost the same, with a difference of 0.5 tetri.

Under market principles, the unit price should decrease when a product is purchased in large volumes. A rising tariff has a social rather than economic character. Another explanation for it is an attempt to protect the grid from overload, since reducing consumption lowers the risk of network accidents.

It is presumed that the same scheme is also planned for the natural gas sector: subscribers who consume more gas will pay more money per cubic meter.

The right to extend the same approach to water is also granted to GNERC, although in most cases the water bill for a family is far lower than that for electricity and gas. For example, if a subscriber paid an average of 100 GEL per month for gas and 10 GEL for water, a 20% price increase would raise the water cost by 2 GEL and the gas cost by 20 GEL.