The New York State Public Service Commission (PSC) has ruled that upstate municipal power authorities can raise their electricity rates if cryptocurrency mining companies choose to use the state’s hydropower.
The ruling comes after the New York Municipal Power Agency (NYMPA) petitioned the PSC regarding concerns that high density load customers, such as cryptocurrency companies, were having a negative impact on local power supplies. NYMPA is an association of 36 municipal power authorities in New York ranging in size from 1.5 megawatts in the Village of Silver Springs, Wyoming County, to 122 megawatts in the City of Plattsburgh, Clinton County. NYMPA represents customer-owned municipal electric systems that acquire low-cost power, typically hydro, and distribute the power to customers at no profit.
According to NYMPA, several municipal power authorities have seen an increase in requests from commercial customers seeking large amounts of power. These requests come mainly from similar types of potential customers: server farms, generally devoted to data processing for cryptocurrencies. The addition of high-density load customers can drastically increase the amount of supplemental power needed by the systems and significantly increases costs to existing customers.
There are at least three cryptocurrency companies operating in upstate New York. NYMPA said that, while some mining firms in the area make up for 33 percent of the municipal utility load, they “have few associated jobs, and make little to no capital investment in the local community.”
To mitigate the impact on existing customers, the PSC will allow municipal power authorities 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 kilowatts and a load density that exceeds 250 kilowatt-hour per square foot per year, a usage amount far higher than traditional commercial customers.
The PSC said the ruling was needed to level the playing field and prevent local electricity prices for existing residential and business customers from skyrocketing due to the soaring local demand for electricity. Electricity costs for high-density load customers is expected to increase beginning in March, while costs for non-high-density load customers will return to their previous levels.
Commission Chair John B. Rhodes said the PSC always welcome and encourage companies to build and grow their businesses in New York. However, the PSC must ensure business customers pay an appropriate price for the electricity they use.
“This is especially true in small communities with finite amounts of low-cost power available,” Rhodes said. “If we hadn’t acted, existing residential and commercial customers in upstate communities served by a municipal power authority would see sharp increases in their utility bills.”
The PSC decision came as one of the affected towns, Plattsburgh, banned new crypto mining operations in the area for 18 months, citing similar power consumption concerns.
Commenting on the ruling, Plattsburgh Mayor Colin Read warned ratepayers that the decision doesn’t mark the end of the city’s energy concerns. He argued that it doesn’t give the Plattsburgh Municipal Lighting Department (PMLD) the latitude to charge miners extra for costs incurred by ratepayers when the operations push the city’s energy consumption beyond its allocated amount of cheap power.
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