Companies file suit against PUD

Companies in Grant County that “mine” cryptocurrency with high-powered computers have filed a lawsuit against Grant PUD, whose commissioners voted in 2018 to raise electric rates for the emerging industry.

The companies say they chose to locate their businesses in Grant County because of the cheap power rates, and that increased rates will inevitably hurt their businesses. They are seeking money for financial losses they say they face, and they’re asking the court to order the electric utility not to implement its new “Schedule 17” rates for “evolving industries,” set to take effect in April.

The amount they are seeking in damages and relief would be determined at a trial, but the companies note combined investments of over $10 million by their nine companies.

The companies say that they are being discriminated against and that Grant PUD is breaking laws by raising their rates, but not those of others.

In a section of the 48-page complaint they labeled “Fear and Loathing of Cryptocurrency Service Providers Produces Grant PUD’s Overreaction in the Form of Rate Schedule 17,” the plaintiffs argue the PUD had unfairly ascribed to them the types of losses it feared it would suffer from other companies that would continue to enter the county with high electric needs.

“Although Rate Schedule 17 ostensibly applies to any ‘evolving industry,’ the evidence makes plain that Rate Schedule 17 is intended to apply only to cryptocurrency service providers, and that Grant is acting with malice toward this new industry, assigning unjustified blame to Plaintiffs, and aiming to cripple cryptocurrency service providers in order to benefit parochial interests in Grant County,” the complaint asserts.

Grant PUD, in its legal response, denied breaking any laws, and denies that it owes any money to these companies.

Since summer 2017, Grant PUD has received new service inquiries for more than 2,000 megawatts of power.

That’s more than three times the electricity needed to power all Grant County homes, farms, businesses and industry, the PUD has said. Approximately 75 percent of those requests came from cryptocurrency miners.

The large demand for electricity could raise the rates for the average user, and to prevent this, Grant PUD commissioners voted unanimously in Aug. 2018 to increase rates for cryptocurrency miners that use powerful computers that use large amounts of electricity to “mine” the cryptocurrencies.

Starting April 1, 2019, those customers will see a 15-percent rate increase, a 35-percent increase in 2020, and a 50-percent increase in 2021, when the new rate will be fully in effect. Any new evolving-industry customers would come in at the rate phase in effect at the time they begin operations.

Evolving-industry customers with monthly energy use that averages 5,000 kilowatts per hour will see rates increase from 4.9 cents per kWh to 13.7 cents per kWh.

For larger evolving-industry customers, billing will increase from 2.6 cents per kWh to 7.9 cents per kWh.

The suit, filed by Seattle based attorneys Eric L. Christensen and Jonathan D. Tebbs Dec. 19, 2018, was brought by the companies Blocktree Properties, Corsair Investments, Cytline, 509 Mine, MIM Investors, Miners United, Telco 214 Wholesale Software, Wehash Technology, and Mark Vargas, an individual.

Absent from that list is Atlas Blockchain Group, which purchased the former Young’s Welding building in Electric City and had been renovating it to mine cryptocurrencies, but where, locals say, they haven’t seen or heard any activity in quite some time.

Yana Papova, chief financial officer of Atlas Blockchain Group, declined to comment this week, but responding to the news of the possible new, higher rates back in 2017, the company’s chief operating officer Fred Stearman said that the increased rates would change Atlas Blockchain Group’s decision to move here. “We wouldn’t open up there, wouldn’t hire any people,” Stearman said. “There could be a class-action lawsuit.”

The defendants in the case are the Grant County Public Utility District No. 2 and its commissioners at the time of the August decision: Terry Brewer, Bob Bernd, Dale Walker, Tom Flint, and Larry Schaapman.

The PUD’s attorneys, in their 46 pages of answers to the complaint, say the commissioners are immune to the suit.