Bills and Rates

N.Y. PSC OKs rates tied to cryptocurrency for public power utility

The New York Public Service Commission on July 12 approved new electricity rates for public power utility Massena Electric Department that the PSC said will allow high-density load customers, such as cryptocurrency companies, to qualify for service under an individual service agreement.

The PSC said that the individual service agreement tariff includes provisions that will protect existing customers from increased supply costs resulting from the new service.

Under the rules approved by the PSC, cryptocurrency customers and other high-density load customers will be eligible for service under an individual service agreement if their maximum demand exceeds 300 kW and the customer provides benefits to the utility.

The change allows Massena to recognize potential benefits associated with high-density load customers, such as increased utilization of currently underutilized transmission and distribution facilities, the commission said.

“As a result, the potential exists for Massena to receive significant revenues if new cryptocurrency companies set up shop in the community. If that were to occur, the utility would be required to defer the revenues for the benefit of ratepayers,” the PSC explained.

The PSC noted that this is the second time that it has ruled on cryptocurrency rates.

The PSC on March 15 ruled that upstate municipal power authorities could charge higher electricity rates to cryptocurrency companies that require large amounts of electricity to conduct business.

The New York Municipal Power Agency, or NYMPA, an association of 36 municipal power authorities in New York ranging in size from 1.5 MW in the Village of Silver Springs to 122 MW in the City of Plattsburgh, had petitioned the commission regarding concerns that high-density load customers, such as cryptocurrency companies, were having a negative impact on local power supplies.

“The ruling was needed to level the playing field and prevent local electricity prices for existing residential and business customers from skyrocketing due to the soaring local demand for electricity,” the PSC said in a news release related to that order.

NYMPA represents customer-owned municipal electric systems that acquire low-cost power, typically hydro, and distribute the power to customers at no profit and the PSC said that the low-cost electricity is a significant reason for high-density load customers to locate in this region. Massena Electric Department is a member of NYMPA.

In a July 12 news release, the PSC said that in recent months, several municipal power authorities have seen an increase in requests for new service from new commercial customers for disproportionately large amounts of power.

These requests come mainly from similar types of potential customers: server farms, generally devoted to data processing for cryptocurrencies. As a direct result of the intense computer data processing efforts, these companies are using extraordinary amounts of electricity — typically thousands of times more electricity than an average residential customer would use, the commission said.

“While such a significant amount of electricity usage might go unnoticed in large metropolitan areas, the sheer amount of electricity being used is leading to higher costs for customers in small communities because of a limited supply of low-cost hydropower,” the PSC said.

To mitigate the impact on existing customers, the commission has already allowed public power authorities, such as Massena, to create a new rate focusing on high-density load customers that do not qualify for economic development assistance and have a maximum demand exceeding 300 kW and a load density that exceeds 250 kWh per square foot per year, a usage amount that the PSC said is far higher than traditional commercial customers.

Under these new rates, existing customers were protected from increased costs associated with serving high-density load customers by allowing NYMPA members to directly allocate costs associated with serving the high-density load customers to such customers, the PSC said.

Other public power utilities addressing cryptocurrency miners

Public power utilities in other parts of the country and are also moving to address the dramatic growth of cryptocurrency mining.

Commissioners for Washington state’s Grant County PUD unanimously agreed on May 8 to move forward with the creation of a new customer rate class for cryptocurrency miners that would protect the interests of the utility’s existing customers.

On May 14, Chelan County PUD commissioners voted unanimously to extend a moratorium put in place in March 2018 for taking or processing applications for electric service for cryptocurrency mining.

In April, commissioners for Chelan County PUD approved new fees and charges for the investigation and enforcement of unauthorized services including cryptocurrency and similar data operations and for the loss of useful life for overtaxed power equipment.

Washington state’s Mason County Public Utility District 3 commissioners on April 10 approved a moratorium on accepting applications for service to “cryptocurrency” operations. Plattsburgh, New York, and the city of Wenatchee, Wash., recently imposed moratoriums on cryptocurrency mining.

In March, Washington state’s Benton PUD said that in response to growing customer interest in cryptocurrency mining and blockchain operations, coupled with concerns about distribution system safety and reliability, its Commission approved an electricity intensive load policy.

Bitcoin miners are being drawn to the Pacific Northwest states of Oregon and Washington, which feature some of the lowest electricity rates in the country, thanks to available hydropower.