Overall since 2022, power rates have dropped for industrial and commercial users. However, rates are region-specific; some regions still have seen increases, while others have decreased.
Rates are a function of revenue and can be reduced as load rises, assuming the load rise does not add additional cost to the system.
Solar panels offer a push back to the utilities’ inefficiency to reduce cost.
Gas and power markets saw minor changes, other than ERCOT and NYA which both showed some strength.
Power rates continue to rise, particularly for the consumer. Industry and commercial are seeing a downward path since 2022, but this likely is not sustainable.
Of course, the devil is in the details: while the overall rates might be down, industrial rates in 18 states have risen since 2022. For example, Nevada’s industrial rate rose 18% from their 2022 average, whereas Lousiana‘s rates dropped 30%. Within each state, there are ranges among the utilities.
The ultimate objective of utility rates is to obtain enough revenue to cover costs, and for publicly traded entities earn a return on investment for shareholders.
Therefore, as long as load is rising and holding expenses, the rates can come down. If load is falling, they have to raise rates to achieve the target revenue.
They can lower rates for certain classes, but ultimately by doing so, some other class has to make up for that discount. Having too wide of a divide between classes will cause many issues.
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Power rates continue to rise, particularly for the consumer. Industry and commercial are seeing a downward path since 2022, but this likely is not sustainable.
Of course, the devil is in the details: while the overall rates might be down, industrial rates in 18 states have risen since 2022. For example, Nevada’s industrial rate rose 18% from their 2022 average, whereas Lousiana‘s rates dropped 30%. Within each state, there are ranges among the utilities.
The ultimate objective of utility rates is to obtain enough revenue to cover costs, and for publicly traded entities earn a return on investment for shareholders.
Therefore, as long as load is rising and holding expenses, the rates can come down. If load is falling, they have to raise rates to achieve the target revenue.
They can lower rates for certain classes, but ultimately by doing so, some other class has to make up for that discount. Having too wide of a divide between classes will cause many issues.
With load rising, the utilities (particularly publicly-traded utilities) can not help but add cost into the system. The only way to maintain or increase dividend is to have large capital investments. This incentive structure is not well aligned with achieving the lower cost of power for society.
Decision making by utility is supposed to be kept in check with the public utility commission (PUC). The other check is for the consumers to reduce load or find their own generation.
When utilities raise rates, consumers will look for alternatives. Wholesale solar levelized cost is near $30/MWh and retail is higher, likely closer to $150/MWh, largely due to fixed labor cost with small size install.
Miners with significant rooftop and adjacent land should consider incorporating a solar analysis into their power strategy, as it can offer some fixed cost structure to a variable power market. It also offers a direct clean power attribution.
BitOoda can help with the analysis, optimization, and execution of a comprehensive energy strategy to take advantage of the falling cost of solar.
Purpose
This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.
Analyst Certification
David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.
Conflicts of Interest
This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.
General Disclosures
Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or throughhttp://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such.BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.
The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.
Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
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Power rates continue to rise, particularly for the consumer. Industry and commercial are seeing a downward path since 2022, but this likely is not sustainable.
Of course, the devil is in the details: while the overall rates might be down, industrial rates in 18 states have risen since 2022. For example, Nevada’s industrial rate rose 18% from their 2022 average, whereas Lousiana‘s rates dropped 30%. Within each state, there are ranges among the utilities.
The ultimate objective of utility rates is to obtain enough revenue to cover costs, and for publicly traded entities earn a return on investment for shareholders.
Therefore, as long as load is rising and holding expenses, the rates can come down. If load is falling, they have to raise rates to achieve the target revenue.
They can lower rates for certain classes, but ultimately by doing so, some other class has to make up for that discount. Having too wide of a divide between classes will cause many issues.
With load rising, the utilities (particularly publicly-traded utilities) can not help but add cost into the system. The only way to maintain or increase dividend is to have large capital investments. This incentive structure is not well aligned with achieving the lower cost of power for society.
Decision making by utility is supposed to be kept in check with the public utility commission (PUC). The other check is for the consumers to reduce load or find their own generation.
When utilities raise rates, consumers will look for alternatives. Wholesale solar levelized cost is near $30/MWh and retail is higher, likely closer to $150/MWh, largely due to fixed labor cost with small size install.
Miners with significant rooftop and adjacent land should consider incorporating a solar analysis into their power strategy, as it can offer some fixed cost structure to a variable power market. It also offers a direct clean power attribution.
BitOoda can help with the analysis, optimization, and execution of a comprehensive energy strategy to take advantage of the falling cost of solar.
Purpose
This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.
Analyst Certification
David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.
Conflicts of Interest
This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.
General Disclosures
Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or throughhttp://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such.BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.
The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.
Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
BitOoda Technologies, LLC is a member of FINRA.
“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.
Copyright 2023 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.