- The New York Public Service Commission last week approved a new rate for Massena Electric Department which will allow cryptocurrency mining operations to purchase power under an individual service agreement that is designed to protect residential customers.
- Many mining operations have located in upstate New York to take advantage of the region's abundance of cheap hydropower. Similar trends have been seen in Canada, Iceland and China, where inexpensive electricity can often be combined with cooler weather.
- This marks the second time New York regulators have ruled on rates for crypto operations, or "high-density load customers" as the PSC refers to them. The operations use "thousands" of times more electricity than a typical residential customer and have raised rates on some systems.
New York wants to attract new industry, but bitcoin mining doesn't tend to give a whole lot back to the community. It's basically a server farm that eats up cheap power.
As more mining operations migrated to upstate New York, residential customer rates rose.
The city of Plattsburgh has about 20,000 residents, and average bills jumped $10 in January because the city was forced to buy additional energy to compensate for crypto mining. In March, in the commission's first crypto rates ruling, the PSC allowed Plattsburgh and dozens of other municipal utilities to charge higher rates.
Now, Massena Electric will review applications for high-density customers to ensure that they will not raise rates for existing customers while the new load benefits the system, potentially through using the new load to address underutilization of some assets.
"As part of our continuing effort to balance the needs of existing customers with the need to attract new companies, we must ensure that business customers pay a fair price for the electricity that they consume," PSC Chairman John Rhodes said in a statement. "However, given the abundance of low-cost electricity in Upstate New York, there is an opportunity to serve the needs of existing customers and to encourage economic development in the region."
Mining operations will be qualified to apply with Massena if their maximum demand exceeds 300 kW, and the customer provides benefits to the utility. The utility's rates are in the lowest 10%, nationally.
"The potential exists for Massena to receive significant revenues if new cryptocurrency companies set up shop in the community," the commission said in its statement announcing the decision. "If that were to occur, the utility would be required to defer the revenues for the benefit of ratepayers."
Crypto mining operations could fly under the radar in a larger metropolitan area, but in a smaller area (Massena has more than 9,000 customers) they stand out. "These companies are using extraordinary amounts of electricity — typically thousands of times more electricity than an average residential customer would use," the PSC said.
Regulators in other countries are reaching similar decisions. In Canada, Hydro Quebec will begin charging crypto miners $0.15/kWh — about three times the previous rate they paid, according to the Globe and Mail.
In the commission's previous decision, regulators allowed the New York Municipal Power Agency (NYMPA), an association of 36 municipal power authorities, to charge higher prices. The new rate focuses on high-density customers that do not qualify for economic development assistance, have a maximum demand exceeding 300 kW
and a load density that exceeds 250 kWh per square foot per year.
The commission's March decision allows NYMPA members to directly allocate costs associated with serving mining operations.