PLATTSBURGH — Citing high electric rates in the City of Plattsburgh, digital currency housing center Coinmint is moving its local operations to Massena for the winter months. 

The group operates large-scale data centers with infrastructure related to the cryptocurrency world and, via its subsidiary North Country Data Center Corporation, has a location at Skyway Plaza off of U.S. Avenue.

Coinmint Co-Founder Prieur Leary said the city's Municipal Lighting Department's membership with Syracuse-based New York Municipal Power Agency, or NYMPA, has caused all city ratepayers to pay extra for supplemental electricity in the colder months of the year. 

So much so, Leary said, that Coinmint's Plattsburgh operations, when compared to that of its Massena operations, had cost almost $1 million more last year. 

According to the co-founder, the group had already begun transporting its 9,000 Plattsburgh-based machines 80 miles west and was expected to finish the move by Dec. 1. 

“We’re forced, because we’re paying above-market rates," Leary said. "Saving $1 million to move machines — I think anyone in their right mind would do it. 

“If Plattsburgh was not a (NYMPA) member and could buy market-rate electricity, we would not be moving.” 

MEMBERSHIP BENEFITS

The City of Plattsburgh Municipal Lighting Department has membership with both NYMPA and its sister group the Municipal Electricity Utility Agency, or MEUA. 

Each organization lists partnerships with somewhere between 25 and 40 other New York municipalities.

The city gets its cheap hydro-electric power from the Niagara Power Plant and, MLD Manager Bill Treacy said, it was the MEUA that negotiated that contract.

Within the NYMPA agreement, the City of Plattsburgh was allotted 103.5 megawatts of power and profited from a range of other benefits, like daily power scheduling and various negotiations.

CRYPTO HISTORY

In recent years, the City of Plattsburgh's low hydro-electric power rates were attractive to digital-mining operations, like Coinmint, but the various operations became notorious for their high-electricity usage, high-heat levels and noisy practices.

A main topic of contention for city residents had been the need to purchase supplemental power, which happens when the municipality exceeds its power quota. 

Citywide electric heating systems during the winter months, mixed with the digital-mining operations, had sent the city over that allotment in the 2017-18 winter.

Supplemental power costs, which were pricier than the city's hydro-power, had been split between all ratepayers, causing some residents to blame digital-mining groups for their upped charges. 

It was in March 2018 that city officials implemented a moratorium on any new operations and took the break to approve a new tariff structure, known as Rider A, and pass a local law, as well. 

In March 2019, when the council majority felt the topic's primary problems had been addressed, the moratorium was lifted. 

ABOVE MARKET RATE

Setting aside the benefits of the NYMPA and MEUA memberships, Leary felt the price of  that extra energy was a striking negative.

"They provide the infrastructure and mechanism for the NYMPA and MEUA members to buy supplemental electricity," he said. "Plattsburgh says they then have to go and buy market-rate electricity.

"When they use the term 'market rate' like that, they're trying to instill that it's super expensive."

But, he continued, Coinmint often buys market-rate electricity at prices much cheaper than the city. 

"In New York, the quasi-government entity that manages the grid and financial infrastructure in New York is the New York Independent Systems Operator," Leary explained. 

"The wholesale electricity is governed by geographical zones and both Massena and Plattsburgh are in Zone D, or the North Zone."

Last February, Leary said, the city's MLD charged Coinmint $0.05 per Kilowatt hour. 

"Which was more than double the market rate," he said, adding that market-rate pricing would have been closer to $0.02 per KWH. 

“It’s not just us," Leary said. "It’s every ratepayer in Plattsburgh that is paying materially above market rate and its been going on for ten years plus.”

Though, he admitted, Coinmint pays more than the average ratepayer, because of industrial and high-density load tariffs. 

HEDGED PRICES

Treacy said, however, when the city needs supplemental power, it doesn't get purchased right then and there. 

"NYMPA buys the supplemental power up to one year or two years in advance," Treacy said.

And, he added, thanks to NYMPA membership, those prices get hedged at the lowest available rate.

"So that if the prices go skyrocketing, we actually get revenue to keep it at that price," Treacy said. "But, of course, if the price drops, which it typically doesn't in the winter time, we'd have to pay even more.

"When you get a polar vortex that goes through, natural gas prices go up, but we have the customers protected. NYMPA protects them." 

CANCEL MEMBERSHIP

Leary said Massena Electric was once a member of NYMPA before revoking its membership, allowing for the cheaper market-rate electricity. 

Massena Electric Superintendent Andrew McMahon confirmed that the municipality had pulled out of that agreement, but would not reveal the motives. 

"We believe Plattsburgh could benefit by withdrawing from NYMPA," Leary said. "It would benefit us. It would benefit every ratepayer in Plattsburgh.

"Not just in terms of what they're seeing on every bill that they have, but, on top of that, the city will be able to attract more industry. 

"They're not going to have to worry about this megawatt limit, they can go out and buy market-rate electricity just like we do." 

'SILLY, IDIOTIC IDEA'

MLD Manager Treacy had a different perspective, though.

Treacy said comparing the City of Plattsburgh's electricity rates to those found on the market would be like comparing apples to oranges. 

"It doesn't take into consideration demand charges, auxiliary charges, transmission charges and everything else," he said. 

And, he added, withdrawing from NYMPA would negate the membership's various other benefits. 

"Our power has to be scheduled and they do that daily," he said as one example. "We don't have the personnel for that kind of work."

Not to mention, payments to the state that, Treacy said, are typically paid weekly, get paid by the City of Plattsburgh just once a month via NYMPA membership.

"There is no way we could pay that. Our cash flow doesn't allow that," he said. "For Plattsburgh to separate, it would cost us a fortune and we wouldn't be able to survive. 

"That would be the most silly, idiotic idea yet."

 

Email McKenzie Delisle:

mdelisle@pressrepublican.com

Twitter: @McKenzieDelisle

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