Staff proposes phase-in of Evolving Industry rate

Commissioners to consider options as discussion continues

On July 31, Grant PUD staff members presented a recommendation to commissioners for a multi-year phase-in of new rates for customers in the proposed Evolving Industry rate class. See the staff presentation here.

The recommendation was given to the commissioners during a special workshop in the Ephrata Commission Room to discuss how the new Evolving Industry Rate Class 17 would be implemented to address the growing cryptocurrency mining industry in Grant County.

For the past eight months, staff and commissioners have worked to develop a new rate schedule and pricing structure that would appropriately address the costs and risks that cryptocurrency miners have on the rest of Grant PUD’s customers.

The new rates, which would be 13.7 cents per kilowatt hour for customers needing less than 200 kilowatts of demand service, and 7.9 cents per kilowatt hour for customers needing more than 200 kilowatts of demand service, were proposed after looking at the costs and risks associated with providing power to customers who fit within Rate Class 17.

Jeremy Nolan, Grant PUD financial analyst, explained during the workshop that Rate 17 would apply to businesses that form a concentration of like customers totaling more than 5 percent of the utility’s total average load, and meet at least one of the following risk criteria:

1.    Regulatory Risk – risk of detrimental regulation that could threaten the viability of the industry.

2.    Business Risk – potential of businesses shutting down or significantly reducing operations because the industry and the value of its output is evolving or unproven.
After finishing a presentation that explained how cryptocurrency mining in Grant County presently fits into the proposed Rate Class 17, and how it would not be suitable for other established rate classes, Nolan presented the staff recommendation, which would be for the board to consider a three-to-four-year ramp-in period for all customers in the Evolving Industry rate schedule.

He said the ramp-in approach helps to address some issues including hitting existing cryptocurrency miners with rate shock while ensuring risk costs are not shifted to other customers. It would also allow Grant PUD staff to evaluate risk costs each year so new information and experience can be easily incorporated into future rate schedule changes with minimal impact.

“With the phased-in approach, we can look at the risk costs each year and the overall cost-of-service analysis study for all rate classes,” said General Manager Kevin Nordt. “We can look at how the industry is evolving and how the queue for new applications changes. It also allows us to make sure the costs are not being born by other customers.”

“We want to be fair and equitable and not have adverse impacts on our current customers,” Nordt added, stating that the ideas behind implementing an Evolving Industry rate would be better than one specific to cryptocurrency mining because it is an industry that may eventually become less risky.

“We thought this would be better than a specific cryptocurrency rate because this would give us time to evaluate it and maybe even eventually sunset (cryptocurrency mining) out of it,” he said.

Nordt said that the staff will soon bring to commissioners for their evaluation a presentation regarding how a phased-in Rate Class 17 would be implemented.

Customers are invited to comment about the Evolving Technology rate during the public comment period of the Aug. 14 board meeting at 30 C Street SW, Ephrata WA at 1 p.m. or by e-mailing commissioners@gcpud.org.

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