In an effort to recover from a $31 million net loss in 2023, Denton Municipal Electric (DME) announced a significant electricity rate increase during a Denton City Council work session on February 20. The rate hike, the first in four years, aims to offset the deficit and fund future operations, including a new venture into cryptocurrency mining that promises additional revenue streams.
Rate Increases and Financial Recovery
DME’s General Manager, Tony Puente, detailed the plan to raise electric rates starting April 2024, with monthly bills for average households (based on 1000 kWh usage) escalating in stages to $137.59 by early 2025. The adjustment comes as DME seeks to repay the $31 million debt over five years, approximately $7 million annually. To mitigate further financial strain, DME will also scale back its campus expansion funding from $75 million to $10 million. Puente highlighted the necessity of these measures, emphasizing the significant impact of financing the annual $7 million repayment on overall rates.
Summer Heat and Crypto Mining: A Double-Edged Sword
The unexpected loss in 2023 was primarily attributed to the summer’s extreme heat, which drove energy prices to the maximum cap. Despite these challenges, DME sees a silver lining in cryptocurrency mining. The city’s largest crypto-mining customer, Core Scientific, contributed $2.3 million in revenue last year. DME is in the final stages of securing a deal with another unnamed business for a mining center at Airport Industrial Park, estimated to generate $2.5 million in net income over five years. This new venture is expected to offer DME a virtually risk-free opportunity to bolster its revenue, as detailed by Terry Naulty, DME’s assistant general manager, during the city council work session.
A Balancing Act: Energy Costs and Emerging Opportunities
The introduction of cryptocurrency mining as a significant revenue source for DME presents an intriguing balance between managing energy costs and exploring new economic opportunities. Council Member Brian Beck emphasized that the city’s involvement with crypto mining companies is limited to selling electricity and leasing land, without any direct investment or incentives. This cautious approach aims to maximize benefits while minimizing potential risks to the city’s finances. Despite the financial challenges posed by events like Winter Storm Uri and the volatile energy market, DME’s strategic pivot towards crypto mining suggests a proactive stance in navigating the complex energy landscape.
As Denton residents brace for the upcoming rate increases, the city’s foray into cryptocurrency mining with companies like Core Scientific and the new, unnamed partner could herald a new era of financial stability for DME. By leveraging the booming crypto industry, DME not only seeks to offset its recent losses but also to secure a sustainable revenue model for the future. This strategy, however, will require careful management to ensure that the benefits outweigh the costs, both financially and environmentally, as the community and its stakeholders watch closely.
Read More: Denton Municipal Electric Plans Rate Hike Amid $31M Loss, Eyes Crypto Mining