Federal Regulator Turns Down Basin Electric’s Proposal for Cryptocurrency Mining Rate
The Federal Energy Regulatory Commission (FERC) issued a substantial decision on Tuesday, wherein it declined a proposal from Basin Electric Power Cooperative to establish rate schedules for cryptocurrency operations and other large loads. In a potentially precedent-setting move, FERC found Basin’s proposal to treat cryptocurrency mining loads differently from other loads of similar size as unjust and unduly discriminatory, thereby rejecting the proposal.
FERC stated that Basin Electric did not provide sufficient evidence to support its claim that all crypto loads pose a greater risk of stranded assets than other loads of similar size. This decision reflects FERC’s commitment to maintaining fair and equitable treatment for all types of loads, regardless of their nature.
Basin Electric contended that cryptocurrency mining operations have the potential to quickly establish and then leave, as they do not require extensive investments in infrastructure or workforce. However, FERC argued that Basin Electric did not adequately demonstrate that crypto operations are more likely than other types of customers to cause stranded assets by relocating after the cooperative invests in transmission and generating assets to serve them.
The commission, while acknowledging the concerns related to the growing number of large loads seeking electric service, expressed sympathy for Basin Electric’s worries about its ability to reliably and economically serve expected load growth. Therefore, the rejection of the proposal is without prejudice, reflecting FERC’s willingness to work with stakeholders to address emerging challenges in the energy sector.
Basin Electric is a wholesale generation and transmission cooperative based in Bismarck, North Dakota, with 140 utility members serving about 3 million customers. In March, the cooperative submitted a request to FERC seeking approval for three rate schedules for crypto and blockchain loads, along with a schedule for new non-crypto loads larger than 75 MW. This marked the first time FERC had considered specific rates for cryptocurrency operations, according to Basin Electric.
The proposed plan aimed to have Basin Electric buy energy at market prices to serve the crypto loads and then pass on the costs to its members, who would recoup those expenses from the crypto operations. However, FERC noted that Basin Electric intended to negotiate a different rate with its members for crypto loads in the Western Interconnection.
Basin Electric informed FERC that it anticipated 200 MW of crypto load in 2023, with expectations for over 1,000 MW in crypto operations coming online in its service territory in the near future. In support of adding a “large load” rate schedule, Basin Electric highlighted its members’ discussions with 22 potential projects totaling nearly 5,000 MW, almost reaching the cooperative’s peak load in 2022.
FERC also noted that some of those projects include direct air capture plants, hydrogen hubs, and green ammonia factories driven by federal and state legislation, reflecting the increasing diversity of large loads seeking electric service.
In conclusion, FERC’s rejection of Basin Electric’s proposal is a significant decision that highlights the commission’s commitment to fair and non-discriminatory treatment of all types of electric loads. This decision also emphasizes the importance of evidence-based decision-making and equitable utility practices in the evolving landscape of energy consumption.
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