Washington’s Chelan County Public Utility District (PUD) has created a new electricity pricing structure proposal for Bitcoin miners in the county, supposedly meant to shift the cost of the increased demand on power to be passed to miners.
Higher Rate for Miners
The proposed rate will see an increase in the variable and the fixed costs being lumped together in a new electricity rate structure. According to a report on Washington based radio station KPQ, which quoted the Customer Utilities Rate Adviser for Chelan County PUD Lindsey Mohns, there isn’t much difference between the current rate and the proposed rate.
Explaining the difference, Mohns noted that the proposed rate structure was modeled after the “existing rate structure that cryptocurrency miners are paying right now.”
“What this new rate structure (Schedule 36) does is brings into it a market consideration on the energy price because we will have to purchase power on the market to serve the variable load associated with cryptocurrency.”
She went further to add that the extra demand on power would be passed to miners.
Kimberlee Craig, Chelan PUD’s Public Information Officer, also noted that the PUD sees the proposed rate structure as being comprehensive as it covers the “cost and protects the investment for the customers that are already here and invested greatly in our system.”
The investment refers to the infrastructure that powers the County, and this is where the increased fixed costs come in. The Chelan PUD’s fixed costs or “upfront charges” will help the Utility company cover the wear and tear on the infrastructures that power the systems, particularly the substations, which is the core component of the PUD.
“So the upfront charges take into account the capacity that’s used by cryptocurrency miners,” Mohns noted.
Read: Bitcoin Energy Consumption
Power Purchases
The PUD also stated that the increased rate also takes into account the power purchases it makes in the market, which it notes might not “necessarily be hydro-power,” due to its low-cost nature—but could be a “blend of renewable energy and fossil fuels.”
The Chelan PUD met with miners in a meeting on November 7, 2018, where it informed them of the proposed rate structure, hoping for their buy-in. But the PUD got more than it bargained for, as the miners expressed their displeasure of being left out of the decision-making process.
One of the miners, Denton Meier, who is a co-owner of mining company Silicon Orchard, said the miners were devastated that the Utility company could make such a decision without involving them in the process.
“I think it’s nice to be able to make comment, but it seems like they’ve already made up their mind. What’s been missing is a round-table discussion and more of a brainstorming session. How can we affect the local economy, how can we work together? Let’s create a business-case scenario and include the PUD in that.”
Meier and other miners present at the meeting had warned the Utility company of their reluctance to pay the new rate structure, threatening to move their business operations elsewhere if the new electricity rates were approved.
He added:
“Looking at it in a bigger picture it’s not just mining but services that can happen around that. Like jobs creation in programming, finance, and other things that will happen over time with the cryptocurrency market. We have the opportunity to become a hub for that. With rates that price us out of that ballgame, it’s not that root that we need to grow those other businesses then, so that will happen elsewhere.”
The County has a history of disagreeing with miners operating in the region. Earlier this year, the County issued a moratorium, informing the community that it won’t be accepting new applications from miners, who see the region as a mining hub due to its cheap power prices. At the time, the County had said crypto mining was straining its power resources and interfering with its key targets. The Utility company also hinted at local bitcoin mining companies, who might not be registered and were using mining machines without the necessary safety standards or cooling apparatus.
