Munis to charge cryptocurrency miners higher power prices in New York
- New York regulators will allow municipal power providers to charge higher rates to high-load cryptocurrency mining operations, which are using large amounts of power and driving up prices for other customers.
- In upstate New York, there are at least three cryptocurrency companies operating, and in some cases, these customers account for a third of their local muni's load, according to the Public Service Commission.
- New rules will allow municipal utilities to create new tariffs which focus on high-density load customers. Those customers must have a maximum demand exceeding 300 kW and a load density that exceeds 250 kWh per square foot per year.
New York's announcement of the new tariffs is a plain-spoken indictment of how cryptocurrencies are consuming power in small towns. There have been several excellent pieces of journalism recently that examine the topic in depth, and New York's new rules could provide a roadmap for other areas facing the same issue.
There are at least three cryptocurrency mining operations in upstate New York, but while small towns are typically open to new businesses, the power load of these mining operations makes them a burden on the system.
“We always welcome and encourage companies to build and grow their businesses in New York,” PSC Chair John Rhodes said in a statement. “However, we must ensure business customers pay an appropriate price for the electricity they use."
And the issue is even more vital in small communities, he said, where there is finite amounts of low-cost energy. The decision follows a petition from the New York Municipal Power Agency (NYMPA), an association of 36 municipal power authorities in. The association represents customer-owned munis buying and distributing low-cost power, often hydroelectric, at no profit.
The lower cost of electricity is one of the reasons crypto miners have migrated to the region. But while their energy load might go unnoticed in a large urban area, regulators say in small communities the load is driving up costs.
In one example, in Plattsburgh, N.Y., regulators said average residential bills jumped $10/month in January "because of the two cryptocurrency companies operating there." In its filing, NYMPA noted a request from a cryptocurrency company for 5 MW of electricity to be added to the Village of Akron.
"If Akron were to comply with the request at existing rates, Akron’s annual average bulk power supply costs would have increased 54% with a direct impact on retail rates," regulators pointed out.
Regulators will allow municipal utilities to create a new tariff focusing on high-density load customers that do not qualify for economic development assistance and have a maximum demand exceeding 300 kW and a load density that exceeds 250 kWh per square foot per year. The PSC said that is a usage amount "far higher than traditional commercial customers."
Electricity costs for high-density load customers will increase beginning in March, said the PSC. Costs for non-high-density load customers will return to their previous levels.
"Had the new rates been in place in January, the two crypto currency companies in Plattsburgh would have seen a more than 60 percent increase in their monthly electricity costs," said regulators.
In other regulatory news, the PSC also slashed National Grid's rate request, cutting it a whopping 86%. The utility had asked to boost revenues by $407 million but will only be allowed to recover $57 million more. The decision will also allow National Grid to spend $2.5 billion modernizing and upgrading its electric grid.
Regulators also expanded the Tier 2 state's clean energy standard, aimed at ensuring half of New York's power is comes from renewable sources by 2030.
Regulators say changes made to the Maintenance Tier program expand the number of already-built renewable energy projects eligible for funding under the program in cases of need, increasing the size threshold for eligible existing hydroelectric facilities from 5 MW up to 10 MW. The commission also took steps to lower regulatory burdens to make it easier to participate in the program if the facility is under economic duress.
Finally, the commission ruled against three energy service companies (ESCOs) in its continuing efforts to reform the market.
Actions included prohibiting one ESCO from marketing and enrolling new customers in New York, while another was approved to serve low-income customers after "demonstrating its ability to provide guaranteed savings to customers."
“In instances where an ESCO proves they are fair to customers, we allow them to continue their activities in New York to bring choice and energy services to customers," said Rhodes. "In instances where an ESCO chooses not to play by the rules, we prohibit their ability to enroll new customers and further require that they provide refunds to customers who may have been harmed by improper enrollment practices.”
- New York Public Service Commission PSC Allows Upstate Municipal Power Authorities to Charge Higher Electricity Rates for Heavy Electricity-Using Cryptocurrency Companies
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