Commission meeting recap for July 10, 2018

Commissioners call for options to ease rate burden on existing crypto firms
Weeks after learning that a rate proposal for “evolving industries” would approximately triple the electric-rate burden on Grant County’s cryptocurrency mining operations, some Grant PUD commissioners Tuesday asked staff for more options. (4:06:50 of commission audio)

“We’ve heard a lot of feedback today — the good, the bad and the ugly,” Commissioner Tom Flint told his fellow board members Tuesday. The board had just finished hearing of public comment, overwhelmingly from the crypto industry, on the proposed Rate Schedule 17 for evolving, higher-risk, industries.

The new rate is the result of six months of Grant PUD analysis into how to handle an unprecedented 2,000 megawatts of inquiries for new power hookups. About 75 percent of those inquiries are from cryptocurrency and related businesses seeking to operate in Grant County. The proposed new rates run just over 13 cents or 7 cents per kilowatt hour, depending on amount of energy use. Other costs also apply. See more details about the proposed rates here.

Two thousand megawatts of power is nearly three times Grant PUD’s average county-wide load of 590 megawatts. It’s enough to power some 900,000 Grant County homes.

“We have said we’d work to prevent ‘rate shock.’ I’m not for grandfathering folks in, but for allowing an industry to adjust in a short period of time,” Flint said.

Commissioner Bob Bernd agreed. “I guess I think there should be some accommodation for folks that are already here,” he said, adding that any adjusted rate for existing cryptos should not be below their cost of service. “Three hundred percent is a huge increase. These people need to be able to operate their businesses with some assurance they won’t have to write off millions because we told them to leave.”

“None of the ones who are already here are causing harm to our system,” Bernd said, suggesting that they still be classified under the proposed Rate Schedule 17 but placed in a different category with a rate that reflects their reduced amount of risk.

Commissioner Dale Walker cautioned that rate differentiation among different types of crypto operations could bring legal challenges.

Commissioner Larry Schaapman said he need more time to think about the proposed new rate schedule, but agreed that cryptocurrency mining operations that have been operating in the county several years don’t present that same risk as the new, incoming cryptos who wouldn’t have proven an ability to pay rates longer-term.
Commission President Terry Brewer also called for options. “There’s nothing in the world I hate to see more than people losing jobs,” he said. “We’ve heard from some of the people who work at these businesses — they’re good jobs. “I think we need to find an accommodation and work with them.”
He agreed with Bernd that none of the cryptos, existing or prospective, should pay below the cost to provide their electricity.

Brewer called for staff to come back with options by early August.

Cryptocurrency companies use industrial amounts of electricity. Grant PUD’s rate policy says industrial customer groups will pay above-cost rates to help subsidize the below-cost of rates of “core” customer groups — residential, irrigation and small and medium-sized business.

Cryptocurrency firms are often highly mobile and agile enough to quickly relocate if they find cheaper electricity elsewhere or shut down altogether if the price of their cryptocurrency falls too low. This makes it riskier for utilities to invest in costly, higher capacity power lines and substations to serve them.

Public comment: The commission discussion followed a comment period in a boardroom packed with members of the public, many or most of them identified themselves as crypto miners, employees of mining firms or businesses that provide them data center space, equipment or services. (2:53:10 of commission audio)

Nineteen members of the public commented during the session. All but two spoke in favor of rates that would allow the firms to remain in business.

They called the proposed Rate Schedule 17 “disturbing,” “discriminatory,” and “predatory.” They insisted that “the blockchain” — the platform that crypto miners depend on — has a promising future to accurately track many types of transactions and records.

Several called for existing businesses to be grandfathered or be allowed to pay for their extra risk up front, by posting a bond or other payment in exchange for a rate low enough for them to remain in business.

Several acknowledged Grant PUD’s concern about not wanting to build out expensive system capacity — new or higher-capacity power lines and substations — for firms that may not be in business long term.

Some also agreed that a proposed new set of higher up-front connection costs presented to commissioners Tuesday are a way to separate financially stronger power applicants from weaker ones. But, they said, existing cryptos who have followed the rules and operated responsibly should not be forced out of business via a much higher rate.

Two longtime Grant County residents said they supported the proposed Rate 17. They said it addresses all of the risk presented by evolving-industry businesses like crypto mining. One called mining of bitcoin — the leading and most valuable form of cryptocurrency — “a parasite providing few jobs and a negligible tax base… that threatens all other rate classes… and has no incentive to conserve.”

Commissioners were scheduled to vote on the proposed new Rate Schedule 17 at their July 24 board meeting. That vote will be postponed until after PUD staffers come back with other options that would protect existing PUD customers but not force all cryptos out of business.

Bitcoin and other cryptocurrencies exist only in digital form. Miners compete with each other, using specialized, high-speed computers that work around the clock to crack complicated math puzzles. Miners whose systems solve the puzzles are then able to process blocks of bitcoin transactions. They’re paid for their efforts in bitcoin.

To comment on the proposed Evolving Industry Rate Schedule 17 or the proposed new costs to connect for industrial energy users, attend the July 24 commission meeting at Grant PUD headquarters, 30 C Street S.W., Eprata, or email commissioners@gcpud.org.

Cost-to-connect proposal
would require more up-front payment

Prospective customers who require a large amount of electricity — half a megawatt or more — would pay a new application fee and the up-front costs of the engineering studies, substations, transmission lines and other electrical equipment needed to hook them up, Grant PUD commissioners learned Tuesday. (2:14:05 of commission audio)

A new customer who requests 5 megawatts of power in a 115-kilovolt substation in an industrial area, for example, would pay more than $2.6 million in up-front equipment costs plus an application fee of $6,500, Shane Lunderville, Grant PUD Business Development manager, told commissioners.

The new cost structure would replace and existing hook-up formula that Lunderville says doesn’t accurately assess costs for new projects nor compensate Grant PUD for engineering work, studies and infrastructure costs. See Lunderville’s presentation here.

Commissioners will discuss and potentially vote on the changes at their next meeting, July 24.

In other business commissioners:

– Learned that spillway work nearly finished at Priest Rapids Dam. Managing Director of Power Production Rich Wallen said the drilling for drainage in the spillway monolith at Priest Rapids Dam is complete. Around 230 core samples have been extracted from the dam’s grout gallery. This inspection drilling helped to reduce the pressure from the water inflow through a disbonded lift joint that saw excessive leakage early this year. The incident never presented a safety risk to the public or PUD employees.

Throughout the next month, crews hope to finish the project by installing additional instrumentation that will help detect any future monolith movements within the spillway. The hope is that after the additional monitoring equipment is installed, The Federal Energy Regulatory Commission (FERC) will remove the lower operating level restriction that is currently in place for the Priest Rapids pool. (1:07:25 of commission audio and pages 0-18 staff reports)

– Tabled until July 24 a vote on a new substation for Royal Slope. Commissioners Tuesday requested the resolution be reworded to reflect the exceptional nature of this project due to past commitments. The area’s port district has been lobbying for the substation for years to attract new business to the area.

Approved a motion for a change order of an existing contract with Graybar Electric to increase the contract by $559,872 and extend the length of the contract by one year. The change brings the contract’s new total to for a total contract of $1,119,744. Graybar has been the only bidder on the project the past three years and this change order will keep the fiber department in stock of gateway systems to meet operational and expansion needs for the upcoming year. (4:01:00 of commission audio and pages 8-12 of the commission packet)

-Heard that PUD recreation areas got more staff, new picnic shelters, one new boat launch. Lands and Recreation Manager Shannon Lowry said the focus throughout the quarter was preparing for the summer recreation season as they hired seasonal crew members and completed the Crescent Bar Riverbend Boat Launch and Parking Area. Grant PUD’s recreation sites also received 17 new picnic shelters to help visitors find additional shade during the warm summer days.

– Recognized Lands and Rec staff for Crescent Bar renovation work. With the majority of the work at the Crescent Bar Recreation Area completed Senior Manager of Environmental Affairs Jeff Grizzel recognized the efforts of staff who have been instrumental in the project. Grizzel pointed out that not only have their efforts resulted in the construction of a top-class recreation site, but staff have also done much to improve the relationships between Grant PUD and those living at Crescent Bar.

Commissioner Dale Walker complimented the group saying he, “was truly impressed with how they (Lands and Recreation) handled the pressures of Crescent Bar.”

– Learned Crescent Bar improvements are paying off. Grant PUD Campgrounds have brought in more than $43,000 through campsite fees for 2018, while the Crescent Bar golf course has earned just over $34,000. In the upcoming weeks staff will be reviewing proposals they received from contractors to provide operation and maintenance support for the Crescent Bar Recreation Area. (1:28:20 of commission audio and pages 20-30 staff reports)

– Received reports regarding the following topics:

 

 

 

 

 

 

 

 

 

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