A Study on the Transition to a Consumption-Based Heat Billing System

The reform of energy prices and tariffs, including the modernization of household heating tariffs, has become one of the most pressing issues in Mongolia’s energy sector today. It is time to transition to a consumption-based heat billing payment system that reflects market costs. The price of heat energy for household consumers in Ulaanbaatar has not changed since 2019. It is 2.8 times lower than the actual cost. This research paper will reflect on the innovation of energy price and tariff design. It will present a study on transferring thermal energy to a market-cost consumption-based payment system. It has become a pressing matter to align the current heat price and tariff categories with market principles. This entails increasing the prices of certain categories that do not align with the cost of purchase from the licensee's tariff and the cost of purchase from the source. Additionally, it involves exempting the heat energy prices and bringing them into line with market principles.