EAST WENATCHEE — Douglas County PUD commissioners on Monday approved power rate increases targeting data centers and cryptocurrency miners, ending the eight-month moratorium on new contracts in the two industries.
Starting in July, cryptocurrency miners will see 10% rate increases every six months for the next five years. The county’s two large data centers, Actapio and the Sabey Corporation, will see 5% jumps on the same schedule.
Other residential and commercial customers will see 3% rate increases annually.
The PUD proposed the rate hikes in part to pay for a $500 million repair project at Wells Dam. The utility also said the higher rates would help them slow significant growth in power usage in the two industries.
Cryptocurrency/blockchain operations now account for 21% of the total customer usage in Douglas County and the two data centers use 15%, according to the PUD. Residential customers account for 37% of the county’s total load.
But since it was introduced in December, the proposal has drawn criticism from business owners and public officials for targeting specific industries. The utility’s public process for collecting feedback was also a point of contention.
In August the utility proposed a flat 3% increase on its largest class of power uses, which included around 200 customers across industries.
But that changed on Dec. 6, when the PUD first released a tiered rate structure targeting the two industries with significantly higher rates. That new proposal was released in an agenda packet that Friday before its public hearing the following Monday.
The PUD commission planned to vote on the proposal 14 days later, at its Dec. 23 meeting, commissioners said in an interview Monday.
But after pushback from business owners, the utility delayed a decision on the rates.
The commission hoped to end the moratorium before the end of the year, which put pressure on the process, Commissioner Molly Simpson said in an interview during the meeting Monday.
“We were trying to stick with our schedule but we didn’t realize people weren’t really paying attention until (the proposal) came,” she said.
In response to a survey last summer, the PUD received around 500 public comments on the moratorium and the idea of reexamining policies around the two industries. But that survey didn’t include the current rate proposal.
The increases were originally intended to begin Jan. 1, but then were pushed back to July. The initial proposal also called for a one-time higher increase for the two industries, followed by the regular jumps.
“We delayed and amped down materially when we realized they weren’t prepared,” Commissioner Ronald Skagen said in an interview during the meeting. “And that was a pretty significant change in our thinking and then we’ve been open to feedback.”
It was also during that period that the Chelan-Douglas Regional Port Authority got involved.
The port held a meeting of 50 concerned business owners and other local stakeholders on Dec. 16.
Port officials have since hired a consultant, written letters to the utility and attended PUD meetings to voice concerns about what they say is a lack of public process.
Skagen said the port’s approach was “adversarial.”
“The port has wanted to include themselves in our rate-making process. That’s our responsibility and we’ve resisted that because that’s not their job,” he said. “They sent us a letter actually, asking for that involvement. They have a different timeline of their objectives. They’re looking at business primarily, right now. We’re looking at customers over generations.”
Port CEO Jim Kuntz said in an interview Monday night that the organization became involved to protect existing county business.
“In economic development, job one is to retain your existing businesses. That’s job one, retain what you have,” he said. “… The new regional port authority commissioners were unanimous in their thinking that this was a business retention issue. That’s why we weighed in.”
Potential business impacts
Douglas County's increased power costs could have a material impact on cryptocurrency and data center growth.
Both Acaptio and the Sabey Corporation, the county’s two large data centers, have said the change will force them to consider expanding elsewhere.
Sabey, the county’s largest power user and the largest property tax contributor, has built three large data center buildings near Pangborn Memorial Airport.
It had the space, and intention, to build five more buildings.
John Ford, a vice president and general manager for Sabey, said in an email last week that the hikes would be “devastating for our business and will make it difficult to bring new data center customers to Douglas County and continue to invest in our facilities.”
Acaptio, which began operations in the county in late 2018, had plans to expand its capacity eightfold by 2028, according to a letter from the company to the PUD provided to The Wenatchee World.
“Given the rate impacts associated with the Proposed Rate Increases, however, we may have to reevaluate our build-out plans for our current facility and our broader business and operation plans in Douglas County more generally,” company CEO Norifumi Matsuya said in the letter.
The company has invested around $100 million into the facility and has nine full-time workers, according to the letter.
Douglas County data centers have a total assessed value of $905 million, according to Chelan-Douglas Regional Port Authority records.
They pay around $9.6 million in property taxes annually, including $2.8 million to the Eastmont School District, according to the records.
The increases will also impact the county’s 26 commercial cryptocurrency miners and small blockchain-type data centers.
John Koones, co-owner of East Wenatchee mining company Power Block Group, said earlier this month that the power rate increases would turn the company unprofitable within three years.
“At that point, what’s the sense of being in business?” Koones said. “... It’s a shame. This process has been less than forthright and the outcome — It doesn’t need to be this way. There are other long-term solutions that would be more beneficial for everyone involved.”