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The Régie de l’énergie Issues a Decision on Provisional Electricity Rates and Conditions of Service in Québec for Blockchain Applications, Including Cryptocurrency Mining

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Energy Bulletin

In a series of decisions, the most recent of which was rendered on July 13, 2018, the Québec energy regulator, the Régie de l’énergie, ruled on the provisional electricity rates and conditions of service in Québec for blockchain applications, including cryptocurrency mining in Québec.

Factual Background:

On June 14, 2018, Hydro-Québec Distribution (“HQD”), the Québec public utility in charge of electricity distribution, filed an application with the Régie de l’énergie to set electricity rates and conditions of service for cryptocurrency mining.

HQD’s application was mainly intended to:

  • provisionally set the conditions of service to suspend the processing of cryptocurrency mining customer applications;
  • set a deterrent rate applicable to: (1) any substitution of use on an existing contract to use it for cryptocurrency mining; and (2) any increase in power use on an existing contract for cryptocurrency mining; and
  • adjust the conditions applicable to municipal distribution networks with respect to cryptocurrency mining.

On June 18, 2018, the Régie de l’énergie issued a provisional order as part of its Decision D 2018 073, which partially approved HQD’s application by:

  • provisionally approving a new customer category for cryptocurrency mining for a period ending no later than June 28, 2018;
  • setting, as of June 18, 2018, the rates and conditions of service for electricity distribution by HQD for cryptocurrency mining suggested by HQD, for a period ending no later than June 28, 2018; and
  • scheduling a hearing on June 26, 2018 on provisional rates and conditions.   

The Régie de l’énergie held a two-day hearing on June 26 and 27, 2018, during which several stakeholders commented on HQD’s application.

On June 28, 2018, the Régie de l’énergie extended the provisional order issued on June 18, 2018, for a period of 15 days (until July 13, 2018, see Decision D 2018 078). The Régie de l’énergie concluded that, to make an informed decision, it needed more time to review HQD’s answers to requests for information.

Decision D-2018-084 dated July 13, 2018

On July 13, 2018, the Régie de l’énergie issued a safeguard order, which partially authorized HQD’s application by:

• provisionally approving the new consumer category for cryptocurrency mining, until a final decision is rendered;
• setting the rates and conditions of service suggested by HQD for the electricity distributed to cryptocurrency mining, until a final decision is rendered;
• setting a schedule for a second phase of this application, which will address the following topics:

• creation of a new consumer category for cryptocurrency mining;
• creation of a dedicated block of 500 MW and associated energy for non-firm use for a minimum term of five years reserved for cryptocurrency mining consumers;
• the components of the selection process;
• a deterrent rate of 15 cents/kWh applicable to all new accounts for cryptocurrency mining, and to any substitution or increases in electricity for cryptocurrency mining; and
• the rates and conditions of service applicable to municipal distribution networks with respect to cryptocurrency mining.

More specifically, with respect to municipal distribution networks, the Régie concluded that, if the available capacity for cryptocurrency mining at the connection point to the municipal distribution network has been confirmed in writing by a municipal distribution network and accepted in writing by a customer prior to June 7, 2018, the “LG rate” continues to apply for this power and energy until the Régie sets new rates and conditions of service applicable to electricity distribution by the HQD for cryptocurrency mining, with no requirement for written confirmation from the HQD. 

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