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Commission recap 1-12-2021: Commissioners question whether crypto miners deserve a ‘core customer’ rate

Commissioners question whether crypto miners deserve a 'core customer' rate

Grant PUD commissioners will continue at their Jan. 26 meeting a discussion about whether Grant County's existing cryptocurrency mining firms should again be billed under a "core-customer" rate schedule, now that too few of them are operating to present a "concentration risk" for Grant PUD.

The discussion comes as the price of the world's leading cryptocurrency, bitcoin, has rocketed from $20,000 per digital coin to more than $40,000 in recent weeks, raising alerts that cryptocurrency miners could again flood Grant PUD with hook-up requests, as they have in the past during market peaks.

Grant PUD customers whose electricity use fits the criteria of a higher-risk "evolving industry" are billed according to the utility's higher-cost "Evolving Industry Rate Schedule 17." The higher rate begins when their total, collective energy use, combined with the expected energy needs of similar customers who have requested service, totals 5% or more of Grant PUD's total "load" —local energy demand.

Rate Schedule 17 has been successful in protecting Grant PUD and its customers from consequences associated with the potentially explosive demand of these energy-intense businesses as value of crytocurrency fluctuates.

Existing cryptocurrency firms are collectively using 1.4 average megawatts of electricity, far below the 5% — approximately 50 average megawatts — needed to meet the concentration threshold for Rate 17, Louis Szablya, senior manager of Large Power Solutions, told commissioners. Staff has recommended that these companies be moved to conventional rate classes, depending on their individual energy usage.

That would likely be Grant PUD's "Large General Service Rate Schedule 7." This rate is a below-cost rate for "core" customers. Other core-customer rates are Residential Rate 1, General Service Rate 2 and 2F for small businesses, and Irrigation Service Rate 3.

Staff would monitor energy use monthly and place the cryptocurrency mining activity back into evolving-industry rate class if their energy use, combined with the projected use of any cryptocurrency firms who are awaiting hookups, exceeds the concentration threshold.

Commission President Larry Schaapman and other commissioners questioned whether a core-customer, below-cost rate is the right rate schedule for a business type that hasn't been core to Grant County history or development of the PUD.

"They're no different than any other business unit. They want predictability," Schaapman said. "I would rather do nothing for the moment and then do it right. My heart is with the core customers of this county. I want to make sure they are first and foremost protected."

General Manager Kevin Nordt said staff would further study the issue and return with more information for further discussion at the commissioners Jan. 26 board meeting.

Hear the entire discussion at 4:18:35 on the commission audio.

Improvements to recreation areas underway

Commissioners received a quarterly report from the Manager of Lands and Recreation, Shannon Lowry as she highlighted various activities the department recently finished or that it is working towards accomplishing early in 2021. Highlights include:

Completing a rebuild of the Buckshot Recreation Area which was damaged during a 2017 wildfire.

Installing a replacement launch float at the Wanapum Upper Boat Launch.

Continuing to monitor and resolve various shoreline encroachment issues ensuring FERC compliance.

Supporting other departments with property/real estate and GIS services.

Lowry also noted that even with a 67-day closure due to COVID-19 in 2020, data shows a steady increase in usage of the utility's campgrounds and the Crescent Bar Golf Course over time.

Compared to the previous year, overall campsite use increased approximately 31% in 2020. Although the extended closure resulted in a slight reduction in the number of golfers last year compared to 2019, total usage of the course was up more than 19% in 2020 compared to 2018.

See the full presentation on pages 19-32 of staff presentations and hear the complete discussion at 1:22:30 of the commission audio.

Commissioners also:

— Heard from Managing Director of Power Production Ty Ehrman that Grant PUD Power Production crews and plants have navigated the challenges of the COVID pandemic by focusing on a balance between crew safety and the work that had to get done to keep the power plants operating reliably.

Needed precautions to keep employees and contractors safe, including social-distancing measures and isolating mission-critical employees from COVID exposure, reduced crew availability and the amount of work planned for the year. Capital spending on planned projects totaled $24 million through November, down from an expected $41.2 million, as work slowed on turbine/generator rehab at Priest Rapids Dam and other projects.

Despite COVID-related effects, unplanned downtime was kept below targets. Turbine/generator unit availability was on target for 8 of 12 months in 2020. Some postponed work has been rescheduled for 2021.

"We're certainly not where we wanted to be at the end of the year, but considering what we were dealing with with COVID effects, it certainly could have been much worse," Ehrman told commissioners.

Hear the full discussion at 35:15 on the commission audio. View the presentation on pages 1-18 of the presentation materials.

— Heard from Manager of Enterprise Risk Paul Dietz that his department will continue work to make all employees better aware of the financial, infrastructural, marketplace, reputational and other risks they are being asked to manage for Grant PUD and get them the tools to better manage those risks. The department's efforts to raise risk awareness and react to known risks resulted in Grant PUD's insurers agreeing to a 17% increase in premiums in 2021 at a time when other utilities are experiencing increases of 25-30 percent, Dietz told commissioners.

Hear the full discussion at 3:17:15 on the commission audio. View the presentation on pages 33-52 of the presentation materials.

— Heard from Manager of Grant PUD's Compliance Program, Gene Austin about the department's 2021 workplan while also reviewing details of last year's North American Electric Reliability Corporation (NERC) audit.

Overall, Austin said the results of last year's audit were positive with regards to both the takeaways and the process the utility went through when working with the regulator. Austin provided additional details regarding the group's 2021 workplan which is outlined on pages 53-62 of staff presentations. You can hear the complete discussion at 3:38:20 of the commission audio.