“There are more important consumers for the country”

Why the Ministry of Energy proposes to raise electricity tariffs for mining centers, the Deputy Minister of Energy told Kommersant Pavel Snikkars.

— Why did the Ministry of Energy decide now to change the rules for regulating mining?

— We were waiting for the law to be adopted. There are several projects, but there is no result yet. We said from the very beginning that the problem of a sharp increase in consumption from mining centers would affect everyone. However, there is still no law on mining. We, as an electric power industry, are already experiencing difficulties and are trying to react without waiting for the formalization of such activities as cryptocurrency mining.

Governors of at least three subjects – the Irkutsk region, Transbaikalia and Buryatia – are already saying that networks cannot ensure the fulfillment of all applications for technological connection (TP). There are refusals on TP for multi-apartment residential buildings and social facilities. They are being considered, but a decision is made with a suspensive condition: for example, the facility will be able to be connected only after a 500 kV transmission line or power plant is built, which means beyond the horizon of 2029.

And now we are developing a draft government resolution for special regulation in the electricity industry of consumers “similar” to mining, which we will discuss with all interested parties.

— The notification about the start of project preparation states that a deficit of more than 700 MW due to mining is predicted in the southeast of Siberia.

— We forecast the total deficit in the southeastern part of Siberia at 1.225 GW by 2029. Firstly, there will be an increase in power consumption by existing consumers. Secondly, the deficit is associated with applications submitted for a significant increase in consumption by existing consumers within the permitted capacity. The third reason is consumers who applied to increase the current capacity. The fourth group is new consumers.

The list of applications, including those for new consumers, includes miners for whom there are already concluded TP agreements. Moreover, now we only take into account applications for TP from new investment projects that are accepted by governors. The list of new applicants also includes companies that officially call themselves miners.

Such an unprecedented explosive growth in electricity consumption of 1.225 GW has never happened. Our offers are a quick response. We want to create economic incentives so that mining centers can move to another location before 2029. We are not proposing to ban anything. We just need to free up power for the natural growth of those consumers that are needed to ensure the vital socio-economic functions of the regions.

— You propose to increase electricity transmission tariffs for miners by two to five times. Why is this so?

— It doesn’t matter to us how many times to change the tariffs for miners – twice, five or ten. The goal is to create an economic incentive for consumers to move elsewhere. Relocation is a cost, including capital, operating and organizational. So, the change in tariff should be such as to motivate the company to temporarily or permanently move somewhere.

It is difficult for me to evaluate such a business, but based on publications in the media, I can assume that life in this industry becomes better, for example, when the ruble exchange rate changes. The value of Bitcoin is also changing, and right now it doesn’t seem to be experiencing the biggest problems in the world. Prices for this cryptocurrency reach gigantic values ​​of tens of thousands of dollars per bitcoin. Colleagues probably calculate these factors and clearly understand their limits. We will only try to find these frameworks experimentally.

— Do you offer specific relocation options?

— You can move even within the boundaries of one region. The problem, for example, arose not in the entire Irkutsk region, but specifically in the south – in the Irkutsk-Cheremkhovo region, which falls into the territory with the necessary construction of generation. The region will be able to change the tariff in this area with a deficit. Please move from the Irkutsk-Cheremkhovo region to another place in the region and continue working! In the south, southeast and north of the Irkutsk region the tariff is low.

We asked the Irkutsk Network Company and System Operator to work out possible locations for placing miners. They said that there is free capacity in the northern part of the Irkutsk region, as well as in the Krasnoyarsk Territory.

— In July, a meeting was held with Deputy Prime Minister Alexander Novak. According to the protocol, he instructed “to create a closed list of permitted ways to provide mining activities with electricity.” What are we talking about?

— To create a list of permitted methods, mining activity as such must appear. We do not hide the fact that we are actually now working on a regulatory framework to abolish non-discriminatory access to power grids in relation to such consumers. There are consumers that are more important for the country: socially significant objects, housing, large real sectors of the economy. We, of course, give preference to these consumers in providing electricity.

— Kommersant’s sources say that mining centers were offered to completely use their own generation, but the Ministry of Energy opposed it.

— Representatives of mining centers said that they were ready to build their own power plants. Build, there are no restrictions on the creation of stations larger than 25 MW. In isolated energy regions, it is possible to build objects without any restrictions at all. But this is just talk so far, there is not a single example. And we prohibit miners from bringing large wholesale generation (more than 25 MW) to retail. And we will prohibit it.

— How are similar problems solved in the CIS countries?

— The topic of mining was raised at a meeting of the CIS Electric Power Council. In Kazakhstan, for example, they have already defined this type of activity, adopted regulatory documents, and introduced taxes. Mining there is actually licensed. Belarus also has a regulatory framework that obliges such enterprises to be registered only on the site of a certain technological park, with safety requirements. World practice is different. For example, China, the world’s main supplier of mining equipment, has in principle banned this type of activity on its territory.

— Will tariffs increase only in distribution networks or in main ones too?

— Tariffs at the level of a constituent entity of the Russian Federation are approved only for distribution networks. Tariffs in trunk networks are at the federal level. The issue of backbone networks is not yet raised. In addition, it is necessary to take into account the peculiarity of the same Irkutsk region – there is no FSK there (Federal Grid Company, part of Rosseti, manages the main power grids.— “Kommersant”), there is no separate tariff for transmission networks, since all high voltage substations and 500–200 kV lines are included in the distribution network boiler. If necessary, we will go ahead and change the regulatory framework for backbone networks.

— If tariffs increase for miners, does that mean they can decrease for others?

— We are solving the specific problem of freeing up energy capacity for consumers. We are against turning the electric power industry into Robin Hood, taking money from the rich and giving it to the poor. The Ministry of Energy has always been against cross-subsidization. In our opinion, the only existing administration system is tax regulation. All support and benefits must go through tax administration and the budget system.

— Will the electric grid company simply have additional revenue?

“If all these decisions are made at the regional level, and mining companies remain and pay increased tariffs, then, indeed, the power grid organization will receive additional revenue. All lost and excess revenues are taken into account in tariff and balance regulation, so regulatory authorities, together with the company and its application, will make appropriate decisions.

As far as I remember, the Irkutsk Grid Company complained that the accumulated lost income was not being returned to it. But this issue is already the sphere of tariff regulation, which is controlled by other bodies. But, it seems to us, there will be no difficulties here: the state regulatory system allows us to see all this, make it transparent and give it a proper assessment.

— How can the conditions of technical connection (TP) for miners change? According to Kommersant, at a meeting with Mr. Novak, the idea was considered to completely ban TP for new miners in regions with shortages.

— Various options are being explored, including abandoning the TP while solving the shortage problem.

— What other options are possible?

— Connection last, after everyone else has been connected. But while the document is being developed, we are discussing all measures with the expert community.

— The possibility of creating a new category of reliability for miners was discussed. Is this being considered?

— The Ministry categorically does not support the allocation of new reliability categories. We propose temporary measures for the period of generation construction and consider it inappropriate to introduce any temporary categories with temporary characteristics.

— Initially, it was assumed that in the new reliability category, consumers would be able to be disconnected from the power supply for a long time.

— Here, rather, we need to think in terms of the logic of the design of the energy system itself. The connection of a new consumer should not worsen the situation of existing entities and existing consumers, and should not create emergency situations. The power system is always designed for certain maximum values.

Ask large or medium-sized consumers which of them are willing to disconnect from the network if the need arises in exchange for a simpler connection scheme. Nobody is ready. Then the question arises: how to separate these consumers from others? Others will then say: we also want to save money, we are ready to consume seasonally. There are established tools, a target demand management model has been developed – participate according to the general rules.

— You yourself call miners “consumers who do not exist.” How will you calculate them?

— The regions will calculate them based on indirect signs. Our task is to develop certain rules for the electric power industry, that is, to give the opportunity to do this at the level of constituent entities of the Russian Federation.

— When is the competition for investment projects for the construction of new generation expected in the southeast of Siberia?

– In December-January.

— How much can new construction cost?

— The cost will be determined at the competition. But we are already seeing a multiple increase in prices for equipment, both for equipment for generation and for power grids. Power engineering manufacturers, in turn, refer to the rising cost of metal, copper, and steel. Operating costs for maintenance and repairs have also increased exponentially. According to new estimates in the modernization calculator, some measures have increased two to three times, and the average specific cost of measures per 1 kW of installed capacity has increased by 22–27% compared to 2019.

— All the changes in regulation being discussed relate to industrial mining. How to solve the problem of gray mining in the household sector?

— As far as I know, there was an appeal regarding this problem, including from the governor of the Irkutsk region. Regions were given the right to introduce differentiated tariffs for the population depending on consumption volumes.

Interviewed by Polina Smertina