Lawmakers are considering a bill that would allow large electricity users, such as cryptocurrency and blockchain miners, chip makers and data centers, to bargain for electricity outside the regulated electricity market.
Proponents say it's a way to attract new businesses that need large amounts of electricity - more than Wyoming can build faster than existing utilities - and that are currently moving to unregulated markets like Texas. Others warn that any form of regulation would be dangerous, leading to high costs and uncertainty for consumers who cannot give up on the regulated consumer market.
Lawmakers have said they want to create a system that allows for unregulated energy deals while protecting average taxpayers from deals that could put them at risk. The Joint Intercom Commission on Minerals, Trade and Economic Development will review two bills, the Industrial Energy Zone and the Direct Electric Service Agreement, at a meeting this week in Casper.
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The measure of the industrial energy zone allows for regulatory exemptions for energy consumed in certain government territories. Direct electricity service contracts take a different approach. Instead of restricted areas, this measure would allow any electricity producer to sell unregulated electricity generation to industrial customers anywhere in the state, outside the boundaries of utility regulation.
Regardless, promoters claim, newly banned customers will pay lower prices. This is because tariffs are not calculated based on the cost of large utility systems, but only based on the electricity and infrastructure they use (power plants, substations and transmission lines) that serve thousands of customers over a large area. geographic.
Whatever action the mining commission takes, some form of regulation is needed, according to Senator Chris Rothfuss, D-Laramie, an advocate of limited regulation. This is because the state is constantly getting calls to push the cryptocurrency and blockchain mining industry to comply with Wyoming's banking laws.
What holds them back, however, is that their business model requires the cheapest electricity possible, not Wyoming's "cheapest" commercial rates, Rothfuss said. State-regulated firms have no incentive to acquire new customers outside of a regulated monopoly system where they have a guaranteed rate of return.
"We have this strange system in the state of Wyoming that blocks any large project that uses large amounts of electricity," said Rothfuss, who chairs the select committee on blockchain technology, fintech and digital innovation. "So what you want, ideally, is an independent microgrid where you have a company that owns the electricity supply."
The Wyoming Rural Electric Association, which represents 14 state affiliates, opposes the legislation, said Shawn Taylor, the group's executive director. The state's largest regulated utilities, Black Hills Energy and PacificCorp, support the idea. The last session failed the same measure, Senate File 71 - Energy Industrial Brownfields.
The average retail price of electricity in Wyoming is 8.7 cents per kilowatt hour, compared to the US average of 10.59 cents, according to the US Energy Information Administration.
One of the reasons Wyoming taxpayers benefit from modest electricity rates is that large commercial customers (such as miners or oil and gas refineries) pay higher rates and help lower the costs of the wider public grid. Some fear that if the state starts excluding large industrial customers from this cost-sharing scheme, prices for other customers will rise.
"We can't put our fingers on the net," said Shannon Anderson, an attorney for the Powder River Basin Resource Council. "It's really a different way to manage the electricity grid."
Creating deregulated areas or isolated industrial microgrids will not benefit the broader electrical utility system serving the state, Anderson said. Some people also believe that cryptocurrency and blockchain mining are risky assets. If a utility builds a new power source to serve a data mining center and the customer grows, the utility and other customers could end up paying for the investment.
"If an organization takes on bad debt, it will go back to taxpayers one way or another," Anderson said.
Cryptocurrency and blockchain mining, as well as data centers and microchip manufacturing facilities, require large amounts of electricity. Globally, the cryptocurrency industry uses more energy than Argentina or Australia, according to a White House fact sheet. Rothfuss estimates that there are dozens of companies interested in coming to Wyoming, each requiring 50 to 200 megawatts of power. One megawatt is enough to power 400 to 900 homes.
Wyoming has 9,599 megawatts of net generation capacity, according to the EIA.
The state is fit to handle the new energy demand, Rothfuss said, with existing natural gas turbines, wind power, and coal-fired power plants eligible for retirement. Wyoming wants to sell more electricity it generates to customers in the state. Wyoming currently exports more than half of the energy it produces.
"In the state of Wyoming, we collect sales tax on every kilowatt consumed," Rothfuss said. "We don't collect sales tax on every kilowatt consumed outside of the state of Wyoming. So we lose money on every kilowatt sold elsewhere."
Black Hills Energy recently partnered with cryptocurrency mining company Bison Blockchain on new blockchain-based utility tariffs authorized by Bill 113 - The Special Electricity Deal of 2019. The tariff allows Black Hills to leverage the market to deliver 45 megawatts of electricity. Bison plans to move to Blockchain, an off-chain business park in the north.
The new tariffs will allow Wyoming utilities to make deals with cryptominers, Rothfuss said, but will not entice utilities to build new power plants in the state.
"What we're still hearing is that it's not enough, partly because utilities don't have electricity available," Rothfuss said.
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