Electricity-hungry industry wants lower power costs. Would Idahoans have to pay for it?

Idaho Power says its customers could pay more money for electricity if a new piece of legislation is approved. And an out-of-state company stands to benefit.

The bill aims to circumvent a ruling by a state agency that created a new customer class for speculative, high-density loads, charging those users higher rates for electricity.

The bill would prevent the Idaho Public Utilities Commission, or PUC, from creating and enforcing rates for separate customer classes. It was brought forth this legislative session after the PUC approved a new customer class for large-scale cryptocurrency miners in June 2022 at the request of Idaho Power.

The case centered around the burden that digital mining places on the entire electrical grid. Miners solve mathematical problems and receive crypto, such as bitcoin, as a reward. Their funds are secured on a digital ledger known as blockchain. Solving the puzzles requires enormous energy for computing.

Idaho Power told the PUC that increased demand from crypto-mining companies could require new substations, lines, transmission resources and power plants that would ultimately raise rates for everyone.

It’s unclear what such an increase would look like. Idaho Power told the Statesman it’s hard to estimate an impact without speculating.

House Bill 585 defines a crypto-mining business as a group of computers working at a single site that consumes more than 1 megawatt of energy a year for the “purpose of generating digital assets by securing a blockchain network.”

One megawatt is enough to power a typical Walmart or Costco, according to a letter from Idaho Power, Avista Utilities and Rocky Mountain Power that opposed the bill.

Backing the legislation is GeoBitmine, whose business model melds cryptocurrency mining with indoor-farming technology. GeoBitmine and other crypto companies have flocked to Idaho in recent years for the state’s relatively cheap power.

Legislation would usurp PUC’s authority

GeoBitmine appealed the PUC’s ruling in 2022 to create a new customer class for crypto generators, calling the classification “discriminatory.” GeoBitmine said the change would halt its plans to develop a crypto-mining operation at an idled J. R. Simplot Co. potato processing plant in Aberdeen. The site would use waste heat from digital mining to power a year-round greenhouse that the University of Idaho Research and Extension Center hoped to use for research, according to the company’s petition.

The PUC separates all its customers into classes based on the way they use power, including residential users, small businesses, larger commercial businesses, irrigators and farmers.

“I’m a farmer. I’m in a situation where I have a particular rate schedule that gets used for the purposes of power I draw related to irrigation,” said Rep. Britt Raybould, a Republican from Rexburg, during a March 8 debate on the House floor. “There’s a process and precedent in place that allows for the specific designation of rate schedules based on industry. Yet here we have a piece of legislation that is saying this particular industry is so special it deserves a carve-out.”

The classification the PUC approved in 2022, called Schedule 20, applies to industrial and commercial crypto-mining operations drawing less than 20 megawatts of electricity per year. That’s enough to power about 15,000 homes, an Idaho Power spokesperson previously told the Statesman. Anything larger falls into another category.

The PUC comprises three governor-appointed commissioners. The agency regulates investor-owned or privately owned utility companies that provide gas, water, electricity or some telephone services in Idaho for a profit.

What separates crypto mining from data centers?

Rep. Vito Barbieri, a Republican from the Coeur d’Alene area, said the legislation would undermine the lengthy process the PUC already went through, which functioned similar to a court case, to establish the new customer class. Another legislator, Rep. John Gannon, a Democrat from Boise, criticized the bill for conflating crypto-mining operations with data centers.

Data centers in Idaho can get a sales tax exemption if they invest $250 million or more and create at least 30 jobs, such as Meta’s data center coming online in Kuna, which invests $800 million and is expected to bring about 100 jobs.

While both data centers and cryptocurrency mining operations rely heavily on the electrical grid, crypto mining is more volatile, because it’s tied to cryptocurrency prices.

Idaho Power spokesperson Jordan Rodriguez told the Statesman that Idaho Power is concerned that adding new infrastructure or purchasing new assets to shore up energy for the crypto miners would increase electricity rates for the rest of its customers. Should the crypto miners pack up and leave the state, the remaining customers would be left to foot the bill, he said.

“In Idaho Power’s experience, few prospective cryptocurrency projects in Idaho have been willing to fund infrastructure upgrades to support their own interconnection,” Rodriguez said by email.

Bill won’t move forward

Rep. Elaine Price, a Republican from Coeur d’Alene, and one of the bill’s sponsors, told the Statesman an amendment to the bill was made Friday that removed several lines related to rate-making and “unduly discriminatory rates.” Rep. Dustin Manwaring from Pocatello also sponsored the bill.

Nonetheless, the bill was voted down at a second reading on the House floor Tuesday. That means the bill “obviously isn’t going to go anywhere” in what remains of the 2024 legislative session, Price said, though it may be brought back next year in pieces.

“I really feel that digital assets are the future, and we need to be out ahead of it instead of trying to come up with policy after it’s already out there,” Price said by phone. “We want to be a state that makes it easy to come here, instead of putting up barriers to entry. This issue is not going to go away.”

Idaho Power said in an email to the Statesman that GeoBitmine was pushing for the legislation.

Price disagreed but said she was approached by someone in the crypto industry that asked if she was interested in carrying a digital-asset bill. She declined to say who that person was. She said GeoBitmine supported the bill once the company heard about it, and later testified on behalf of it.

What happened to that Idaho bill? Stay updated on latest with this 2024 tracker

Idaho Republicans could change how future elections are run. Here are 5 issues to watch