Commission Recap 02-25-2020 Smaller rate increase forecast for evolving industries -- unless demand again spikes

Cryptocurrency mining operations in Grant County will get a far smaller rate increase April 1 than originally forecast, if commissioners approve the staff recommendation, announced Tuesday.

Connection requests from this high-energy-use group has declined from 402 average megawatts of electricity to just under 90 average megawatts since the first of Grant PUD's higher Rate Schedule 17 for "evolving industries" took effect April 1, 2019.

Over the same period, energy requests for more traditional industries, such as ag processing, have increased, Louis Szablya, senior manager of Large Power Solutions, told commissioners.

The result is a reduced "concentration" risk from the evolving industry rate class, and a lower-than-projected rate increase for the second of the rate's three-year phase-in.

The all-in rate for the county's larger cryptocurrency firms is currently just over 3.4 cents per kilowatt hour. Staff is now recommending an increase of 4.2 cents per kilowatt hour April 1, down nearly 22 percent from the original projected increase of 5.3 cents per kilowatt hour.

In 2021, the third of the new rate's three-year phase in, the recommended rate increase is now 4.9 cents per kilowatt hour, down 39% from the original 8.0 cents per kilowatt hour.

Reductions have also been reduced for the smaller cryptos, which operate in residential areas.

These rate projections will again increase if the reduced rates attract large numbers of cryptocurrency miners seeking hookups.

The staff recommendation resulted from a mandatory annual evaluation of evolving-industry risk required of Rate 17.

The evolving industry rate is higher than other rate schedules to protect Grant PUD and its customers from the financial risk of nascent businesses with high energy demand. Currently only cryptocurrency mining meets the Rate 17 risk criteria:

Concentration risk: The sum of existing evolving industry load, plus new electric service requests totals 5% or more of total county-wide load. And one of the following:

Business risk: The business is prone to volatility of its primary product, based on proven business models that gauge financial risk.

Regulatory risk: Pending state or federal regulation could render the business poetically unviable.

Commissioners approved Rate 17 in 2018 in response to a big influx of energy requests from cryptocurrency miners in 2017, as the price of a leading cryptocurrency, bitcoin, peaked.

Cryptocurrency miners currently use 22.5 average megawatts of electricity in Grant County, up from 8.7 average megawatts in 2017.

Commissioners are scheduled to vote on the staff proposal March 10 during their regular session at Grant PUD's Ephrata Headquarters. For more information on the staff's annual Rate 17 analysis, view the full presentation here, pages 38-67. Listen to the discussion at 1:59:00 on the commission audio.

New bucket trucks coming soon

Four new bucket trucks will soon be on their way to Grant PUD, following commission approval to replace four existing bucket trucks that have exceed their effective life cycle. Commissioners unanimously approved a contract with Altec Industries for $1.1 million to custom build each unit specific to the needs of Grant PUD.

In a memo to the commission, it was noted that the life expectancy of a boom truck used in the electrical industry is roughly 15 years. Two of the trucks to be replaced are 2006 models and the other two were built in 2007. Bucket trucks are an essential part of Grant PUD's Power Delivery crew's ability to perform necessary line work.

The four existing trucks were identified for replacement in the utility's 10-year capital fleet replacement program.

Three of the trucks should arrive later this year and the remaining vehicle in 2021.

See the memo on pages 07-10 of the commission packet.

Commissioners also:

— Heard a report from Grant PUD's newest department, the Project Management Office (PMO). The group is bringing a standardized approach to managing projects across the utility.

Julie Pyper, Senior Manager of the Project Management Office said the group is looking to improve the probability of Grant PUD delivering successful projects.

Depending on the scope of a project, PMO personnel will work with other employees through the utility to accomplish a project. In 2019 the departmental budget spend was $39.7 million.

See the presentation to the commission on pages 82-110 of staff presentation materials and hear the discussion at 03:35:15 on the commission audio.

Learned that the switch to the new ESRI Geographic Information System (GIS) tool is moving forward. The new system will provide enhanced mapping tools that will benefit the electric and fiber-systems.Review the details of the project from a previous commission meeting summary here.

The 22-month project, which is part of the utility's broader "technology roadmap," looks to begin next month and finish up in the summer of 2022 with an estimated cost of $5.3 million.

Susy Anderson, Grant PUD Engineering Services supervisor and a project team member told commissioners the utility's current systems are not presently supported or upgradable. The new system will dramatically improve workflow and allow for future add-ons with additional features.

General Manger, Kevin Nordt added that the need for the GIS is fundamental for Grant PUD's operations.

Commissioners' are scheduled to vote on project's contract at March 10 commission meeting.

View the presentation on pages 13-37 of staff presentation materials and hear the discussion which begins at 01:29:15on the commission audio.