On August 20, 2024, the Federal Energy Regulatory Commission (“FERC”) issued an order rejecting, without prejudice, a contested proposal from Basin Electric Power Cooperative (“Basin”) to establish special wholesale power sales rate schedules for cryptocurrency (“crypto”) operations and other new large loads. While FERC expressed sympathy for Basin’s concerns regarding its ability to serve expected load growth reliably and economically, FERC found that Basin failed to justify its proposal to treat crypto currency mining loads differently from other large loads and therefore rejected the differential rate proposal.
Basin is a wholesale generation and transmission cooperative based in Bismark, North Dakota, that has 140 utility members. In March, Basin filed a set of wholesale power rates with FERC that proposed to add three Crypto Block Chain Rate Schedules (“Crypto Rate Schedules”) and a new large load schedule for non-crypto loads larger than 75 MW (“Large Load Schedule”). Basin stated in its filing that it had 200 MW of crypto load in its service territory in 2023 and was expecting an increase of over 1,000 MW of crypto load in its service territory over the coming years.
Under the proposed Crypto Rate Schedules and Large Load Schedule, Basin proposed to charge loads related to crypto mining operations at market prices, which would have been different than how Basin charges other large loads, like data centers, and would have permitted non-crypto large loads to transition over a five-year time frame to its cheaper general rate structure. Basin explained that, in its view, cryptocurrency and new large load is “highly speculative” in nature and could lead to significant utility investment in generation and transmission resources to serve a load that may never materialize. Additionally, Basin explained that crypto load should be treated differently from new large load because its high energy usage can relocate and change frequently based on economic signals and market fluctuations, leading to a risk of stranded costs if Basin were to make long-term resource commitments to serve the load. Basin’s proposed Crypto Rate Schedules and Large Load Schedule were structured to, in Basin’s view, account for the risk of stranded costs by appropriately allocating the costs associated with serving the load to the entity that caused those costs and incurred those benefits.
Basin’s proposal was robustly contested by various stakeholders, including the crypto load customers. Crypto load customers raised various arguments in the proceeding, including that Basin had not provided sufficient evidence to demonstrate why crypto loads should be treated differently than other customers. FERC essentially agreed, rejecting Basin’s proposal and finding that Basin did not meet its burden to demonstrate that the proposed Crypto Rate Schedules and Large Load Schedule were just and reasonable and not unduly discriminatory or preferential. Specifically, FERC found that Basin failed to provide adequate evidence to support its assertion that all crypto loads posed a greater risk of stranded assets than other large loads. FERC acknowledged increasing utility and stakeholder concern related to serving new large loads (see link to the upcoming Commissioner-led Technical Conference Regarding Large Loads Co-Located at Generating Facilities below) and stated it was “sympathetic” to Basin’s concerns regarding its ability to serve new large load economically and reliably. However, those concerns were not enough to save Basin’s differential rate proposal given FERC’s overarching apprehension regarding undue discrimination.
FERC’s decision, issued in Docket No. ER24-1610, can be found here. A link to the upcoming Commissioner-led Technical Conference Regarding Large Loads Co-Located at Generating Facilities can be found here.
