20220426Reply Comments.pdf

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Lisa D. Nordstrom
rnDroolP(bmrty
P.O. Box 70 (8!1707)
tzll W. H.ho St.
Bols., lD 83702
LISA D. NORDSTROM
Lsad Counsel
I no dstrom@ida hoporrer.com
April26,2022
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, ldaho 83714
Re: Case No. IPC-E-21-37
Application of ldaho Power Company for Authority to Establish A New
Schedule to Serve Speculative High-Density Load Customers
Dear Ms. Noriyuki
Attached for electronic filing is ldaho Power Company's Reply Comments in the
above-entitled matter.
lf you have any questions about the attached documents, please do not hesitate to
contact me.
Sincerely,
o(* !.7("1,t..*,
LDN:sg
Enclosure
LISA D. NORDSTROM (lSB No.5733)
Idaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
ln ordstrom@ida hopower.com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO ESTABLISH NEW
SCHEDULE TO SERVE SPECULATIVE
HIGH.DENSITY LOAD CUSTOMERS.
CASE NO. tPC-E-2'.1-37
IDAHO POWER COMPANY'S
REPLY COMMENTS
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ldaho Power Company ("ldaho Powef or "Company') respectfully submits the
following Reply Comments in response to comments filed by 2140 Labs LLC ("2140
Labs"), and ldaho Public Utilities Commission ("Commission") Staff ("Staff') on April 12,
2022.
The Company is agnostic to the business activities of customers. However, it is
also commifted to balancing its obligation to reliably serve with the need to mitigate
potential system risks related to acquiring generation which may, in the long run,
ultimately impact the broader customer base. Leveraging the Company's existing
resources in an efficient manner benefits all customers, and the proposed requirements
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
of Schedule 2O - Speculative High-Density Load ('Schedule 20"), strikes that balance to
1) meet the obligation to serve a new customer segment with efficient utilization of the
Company's generation and transmission system, and 2) reduce the potential risks of
acquiring additional capacity to serve these customers which potentially becomes
stranded investment.
ldaho Power appreciates Staffs recommendation that the Commission approve
the Schedule 20 customer class as filed.l ln these Reply Comments the Company will
provide additional support for the need to proactively mitigate system risks from the
proposed Schedule 20 customer segment, align with Staffs recommendation to complete
additional evaluation within five years from the date the Company commences service to
customers under Schedule 20, and respond to comments received from2140 Labs.
I. ESTABLISHING SCHEDULE 20 PROACTIVELY MITIGATES SYSTEM RISKS
!n their comments, Staff highlights the reasonableness to proactively mitigate
system risks from high-density load customers on ldaho Powe/s system through
establishment of proposed Schedule 20.2 As noted by Staff, although the initia! 17
customers cited in the Company's Application have not established service with ldaho
Power, Staff believes there is still a high probability that customers qualiffing under this
classification will still seek to obtain service from the Company.3 ldaho Power supports
this perspective as potential cryptocurrency mining customers'outreach to ldaho Power
to evaluate electric service in the Company's service area continues today.
1 Staff Comments, p. 8.
2 ld., p.3.
3 ld., p.4.
IDAHO POWER COMPANY'S REPLY COMMENTS -2
Stranded asset risks have not decreased since the Company filed its Application
November 4, 2021. Recently, Marathon Digital Holdings ('Marathon") announced a
decision to cease purchasing power from the Hardin coal power plant in Montana for its
co-located large-scale cryptocurrency mining operation, and relocate that operation to a
location served by a cleaner generation resource.l That announcement was made April
5,2022, one year after Marathon pledged their cryptocurrency mining operations would
be 100 percent carbon neutral by year-end 2022, and importantly, onlv two vears after
executinq a five-vear power-purchase aqreement ("PPA') for energy service from the
Hardin coal plant. The ability of this large-scale cryptocurrency miner to quickly relocate
operations was not only due to energy economics as the PPA was offered at
$0.028/kilowatt-hour, but the pursuit of other corporate goals. This example serves to
further validate this customer segment's transitory risk that ldaho Power is seeking to
mitigate through proposed Schedule 20. VUhile carbon-neutrality at its operations is a
laudable business goal, the speed and ability of Marathon to expand operations, pivot
company objectives, and exit operations in the span of two years while breaking
contractual obligations of a five-year PPA reinforces risk of potential stranded, multi-
decade cost recovery for transmission and generation plant investment required to serve
this load.
The transitory nature of cryptocurrency mining load is itself marketed as a valuable
business advantage to industry participants. ldaho Power has become aware of
solicitations to its customers who are currently interested in smaller-scale cryptocurrency
a Bitcoin MinerWill Leave Coal-Fired Hardin PowerPlant, Clearing Up, M!15.2022 (No.2051), April 8,
2022.
https://www.newsdata.com/clearino up/briefs/bitcoin-miner-will-leave-coal-fired-hardin-power-
olanUarticle 45b0475a-b759-1 1 ec-82de-87533ddea36c.html
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
mining to house operations in shipping containers located at the customers' premise.
The soliciting company's marketing specifically highlights "the advantage of the shipping
container is their accessibility and how it can easily move. lf the electricity prices rise or
political climate changes, all that the company would need to do is pick up and move."s
Operational transitoriness is an advantage marketed to prospective cryptocurrency
miners, but this advantage becomes a stranded cost risk to all other customers on that
electric system if the proper cost safeguards are not in place.
Driving greater risk to all energy providers supplying energy to large
cryptocurrency mining operations is a campaign to fundamentally change how Bitcoin
and other cryptocurrencies are validated (the consensus mechanism), moving from
proof-of-work to proof-of-stake, which is 99.9 percent less energy intensive.o The proof-
of-stake consensus mechanism is already being tested by Ethereum, a cryptocurrency
with the second largest market capitalization behind Bitcoin.T lf Ethereum is able to move
to the proof-of-stake consensus mechanism, it may either increase Ethereum's
5 Crypto Data Centers Built With Shipping Containers, Shipped.com, June 13, 2019.
https://shipped.com/bloq/crvpto-data-centers-built-with-shiopinq-containers/
6 Change The Code: Not The Climate - Greenpeace USA, EWG, Ofhers Launch Campaign to Push Bitcoin
to Reduce Climate Pollution, Greenpeace, March 29,2022.
https://www.qreenpeace.orq/usa/news/chanqe-the-code-not-the-climate-qreenpeace-usa-ewq-others-
launch-campaiq n-to-push-bitcoin{o-reduce-climate-pollution/
A single change in Bitcoin's coding could reduce its carbon footprint by 99%, say campaigners,
Euronews. next, March 30, 2022.
httos://www.euronews.com/nexU2022l03/29la-sinqle-chanqe-in-bitcoin-codinq-could-reduce-its-carbon-
footprint-bv-99-sav-campa iq ne rs
Michael Brune's next battle: Clean up bitcoin, E&E News Climatewire, March 29,2022
https://www.eenews.neVarticles/michael-brunes-next-battle-clean-uo-bitcoin/
7 Ethereum's First Mainnet Shadow Fork Goes Live as Move to PoS Continues, Coindesk, April 12,2022
https://www.coindesk.com/tech/2022104/11/ethereums-first-mainnet-shadow-fork-ooes-live-as-move{o-
pos-continues/
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
popularity to overtake Bitcoin as the dominant cryptocurrency, or force Bitcoin to adopt
the same consensus mechanism. lf either scenario occurs, electric demand could
diminish 99.9 percent resulting in significant slack capacity in the electric system, and
potentially stranded generation and transmission assets across the United States from
investment in resources to serve the current proof-of-work consensus method
cryptocurrency miners.
II. IDAHO POWER'S ALIGNMENT WITH STAFF'S RECOMMENDED FUTURE
EVALUATION
The Company agrees with Staffs recommendations to evaluate the following items
five years from the date the Company commences service to customers under Schedule
20:
1. Assumptions regarding the risks and need for mandatory interruptible service;
2. The need for non-interruptible service through special contracts or other
options for customers with loads below 10 MW; and
3. The need for marginal cost-based rates.
Staff further recommends that prior to developing the next general rate case filing,
the Company:
1. Evaluate and compare other methods for determining a margina! cost of energy
in addition to the use of Avoided Cost Averages in the IRP for the Schedule 20
energy rate; and
2. Collaborate with Staff after re-evaluating Schedule 20 cost assignment based
on usage characteristics and system requirements, and assign cost and
be nefi ts i ncorporating interru ption req u i reme nt pa rameters.
IDAHO POWER COMPANY'S REPLY COMMENTS.5
III. 2140 LABS COMMENTS
lntervenor 2140 Labs suggests renaming Schedule 20 "Emerging lndustry" rather
than "Speculative High-Density Load" in the spirit that the Commission take an active
role in the economic development opportunities that could result from cryptocurrency
mining in the State of ldaho.s ldaho Power disagrees and questions the appropriateness
of the arguments expressed by 2140 Labs for the societal economic benefit of
cryptocurrency mining, which the Company believes are misplaced and are wel! beyond
the scope of this utility ratemaking proceeding.
While the Company agrees with 2140 Labs assessment that cryptocurrency mining
load operates at a consistent and predictable Ioad,e ldaho Power cautions the risk of
conflating the cryptocurrency miners' high load factor with transitory load and the
associated stranded cost risks ldaho Power seeks to mitigate.
rv. coNcLustoN
ldaho Power appreciates the opportunity to respond to comments filed in this case
and respectfully requests that the Commission issue an order approving the Company's
Application to create Schedule 20 - Speculative High-Density Load as filed and authorize
implementation prior to the start of the June 15 to September 15 interruption period.
Commission approval of proposed Schedule 20, and implementation of a
mandatory interruption rate class for a customer segment that creates stranded asset
risks from the transitory nature of their load, provide a reasonable balance between ldaho
Power's obligation to serve al! customers and mitigation of stranded asset cost-shifting to
I2140 Labs LLC Comments, p. 4.
s ld., p.2.
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
the broader customer base.
DATED at Boise, ldaho, this 26fr day of Aprilz0zz.
X* !-ff^1.+r.-*,
LISA D. NORDSTROM
Attorney for ldaho Power Company
IDAHO POV\ER COMPANY'S REPLY COMMENTS -7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 26th day of April2022l served a true and correct
copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following named
parties by the method indicated below, and addressed to the following:
Gommission Staft
Riley NeMon
Deputy Aftorney General
ldaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg No. 8,
Suite 201-A(83714)
P.O. Box 83720
Boise, ldaho 83720-007 4
Dr. Don Reading
6070 Hill Road
Boise, lD 83703
2140 Labs LLG
Elizabeth A. Koeckeritz
Givens Pursley LLP
601 W. Bannock Street
Boise, ldaho 83702
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Stacy Gust, Regulatory Administrative
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lndustrial Customers of ldaho Power _Hand Delivered
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Richardson Adams, PLLC _Overnight Mail
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IDAHO POWER COMPANY'S REPLY COMMENTS - 8