Kentucky Public Service Commission Makes Decision on Another Cryptomining Discounted Rate Case

On September 15, 2023, the Kentucky Public Service Commission (PSC) issued a decision, with additional conditions, concerning special discounted rates that was given by Kentucky Power to Cyber Innovation Group, an estimated 7 MW cryptocurrency mining facility that is currently up and running near Hatfield in Pike County.

These rate cases should be of interest and concern for all customers of Kentucky Power because, without consumer advocacy group intervention and pending a ruling of the PSC, electricity bills could be impacted and go higher.

The reason being is that Kentucky Power has confirmed several times in case hearings that they do not have the power generating capacity needed to supply cryptomining sites without periodically purchasing power on regional open markets. The purchase of additional electricity on open markets will most likely be at a higher cost, with these higher costs potentially being spread out and divided among all other Kentucky Power customers.

In the Cyber Innovation Group decision, Case # 2022-00424, the Kentucky PSC approved a special contract with over 2.5 million in discounts but additional conditions were applied. Cyber Innovation Group must cover any increased costs associated with Kentucky Power purchasing any new capacity on the open market and Cyber Innovation Group must post a 2.5 million security bond against the risk that they might default.

These conditions are designed to protect other Kentucky Power customers bills from rising in regards to power purchases and discounts made to benefit the cryptomining facility.

Several public interest organizations have intervened and contested the discounted rates in these cases in an attempt to ensure that the average Ky Power consumer is not left with a larger electric bill.

The intervening organizations include Kentuckians for the Commonwealth, the Sierra Club, Mountain Association, Kentucky Resources Council, and Appalachian Citizens’ Law Center. Earthjustice, a non-profit law firm, has represented the advocacy groups. The Kentucky Conservation Committee and Apogee-Climate & Energy Transitions, along with the intervening groups mentioned above, had previously written a letter to the PSC which warned of the numerous risks of cryptomining and pointed out that other utility rate payers may be on the hook for additional costs due to this unique business.

In an earlier August 28, 2023 ruling by the Ky PSC, Case # 2022-00387, a proposed discounted rate contract between Kentucky Power and Cryptomining firm Ebon International was denied. Ebon International has proposed to build a large facility in Louisa. It is unknown at this time when or if this facility will be built.