Cheney’s City Council members believe they have taken steps to protect the city’s electrical system from becoming over-taxed by large users locating in Cheney due to its cheap power.
At its Oct. 23 meeting, the council passed an updated line extension policy designed to cover users who seek one megawatt or more of power for their business uses. The policy came about in response to a six-month moratorium enacted by the council in April due to two cybercurrency mining businesses beginning operations in the city.
The policy was originally brought forward at the council’s Sept. 25 meeting, but was sent back after several members took issue with some of the language. City Administrator Mark Schuller said that language had been cleaned up and some terminology updated and made more consistent.
The updates are geared towards loads exceeding one megawatt, and require the user to enter into a “Electric Service Agreement” with the city along with paying an application fee of $1,000 and any costs for engineering studies that might be required. The user also must pay a system facility fee prior to receiving any power that “shall be used to fund the development of additional service capacity in the City electrical system consumed b the new large single load.
The fee applies only to loads equal to or greater than one megawatt, is assessed monthly, is amortized over the first five years of the service agreement and is nonrefundable. Failure to pay results in termination of electrical service until the fee is paid.
The new policy also includes a reserved capacity fee that is nonrefundable and paid in equal installments over a 12-month period. If the customer doesn’t use the reserved capacity within six months, it is released and returned to Cheney for “the benefit of the City electric system.”
If the customer is making “substantial progress” towards utilizing the capacity, it is granted a six-month extension.
Both the system facility fee and the reserved capacity fee are assessed at $114 per kilowatt. The amount is calculated by taking the city Light Department’s 2018 depreciated book value and dividing it by Cheney’s total electrical system capacity.
According to the city’s policy, the Light Department’s depreciated book value is $5,722,045. The city’s electrical system’s maximum transformer capacity is 50 megawatts, with it’s peak loading of 28 megawatts coming in 2017.
In installing the policy, the city is making the determination that it can meet single-load user requirements up to a total of six megawatts. Schuller said this would allow for revenue generation and expanded infrastructure, but also protects the public.
“We would have enough power to attract light industry, despite cryptocurrency,” he added.
Not everyone on the council felt comfortable with the policy. Councilman John Taves, who voiced concerns about the language in the requirements at the Sept. 25 meeting, said he was concerned the city was sharing too much of the risk with large users. He also pointed out continued inconsistencies in language in the revised policy, which Schuller said city attorney Stanley Schwartz could clean up.
Councilman Paul Schmidt said the goal of the policy is to protect the public from large, single loads taking up existing capacity, and felt the city had done this.
“I’m a lot more comfortable now than when we started,” Schmidt said. “Are you not comfortable, John, with this?”
“I’m just nervous about these companies long-term longevity,” Taves replied.
In an Oct. 10 story, CNBC reported that around $13 billion in the value of the cryptocurrency market was wiped out in three hours after the International Monetary Fund warned that cryptocurrencies “could create new vulnerabilities in the international financial system.”
John McCallum can be reached at [email protected].
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