PUNISHED? — The Omnis Pleasants plant is seen in this photo from August 2024. A Senate bill discussed Monday night by the House Energy and Public Works Committee could punish all coal-fired power plants in West Virginia that don’t come close to operating at a 69% capacity factor. -- Steven Allen Adams

CHARLESTON – A bipartisan majority of the West Virginia House of Delegates sent a clear message to the state Senate Tuesday by rejecting the Senate’s efforts to require coal-fired power plants to operate even when it makes no economic sense to do so.

The House moved Tuesday morning to not concur with Senate changes to House Bill 4026, expanding the requirements for integrated resource plans utility companies must file with the Public Service Commission, in an 87-7 vote, with five absent or not voting. The House sent the bill back to the Senate and asked them to recede from its amendment.

The House first passed HB 4026 on Feb. 27 in an 86-6 vote, with seven absent or not voting. The bill, as introduced, would have required power companies to conduct evaluations of advanced transmission technologies in their long-term strategies by addressing the economic feasibility and technological benefits of tools like dynamic line ratings, power flow controls and high-capacity conductors.

But the Senate amended HB 4026 to include language from Senate Bill 420, the West Virginia First Energy Act, which would encourage electric utility companies to reach a 69% operational utilization rate for coal-fired power plants by offering financial incentives tied to cost recovery. The bill also mandates that electric utilities maintain a 30-day fuel supply to ensure grid reliability. The Senate passed HB 4026 on Feb. 27 in a 32-2 vote.

House Majority Leader Pat McGeehan, R-Hancock, said Tuesday that the Senate’s amendments to HB 4026 were likely not germane to the original intent of the bill, possibly violate the rule that requires legislation to be limited to a single subject and could harm electric ratepayers.

“The purpose of the original bill was to include analysis of advanced transmission technologies by regulated electric power companies in their integrated resource plans filed with the Public Service Commission. However, the Senate amendment inserted an entirely different bill into this House bill,” he said.

The overwhelming House vote to not concur with the Senate’s amendments to HB 4026 could also put the Senate’s First Energy Act in jeopardy after the House Energy and Public Works held a three-hour public hearing on SB 420 Monday night.

On top of heavily incentivizing electric utility companies to operate their coal-fired power plants at a 69% capacity factor, SB 420 would require state approval before any fossil fuel facilities are retired, something already required by state law. The bill restricts utilities from recovering costs for intermittent energy sources like wind and solar.

The bill is supported by the West Virginia Coal Association, which sees it as a way to increase the need for steam coal and put coal miners back to work.

“Coal-generated power and coal fuel for electric generation remains the lowest-cost possible way to make electricity in this country,” said Jason Bostic, executive vice president of the West Virginia Coal Association. “Coal plants should be running a lot harder. They should be running a lot harder to the benefit of the customers and to the benefit of the West Virginia coal miners that supply those plants with their fuel. Those plants are overwhelmingly fueled from West Virginia-sourced coal.”

According to a West Virginia Coal Association-commissioned study released this week by West Virginia University’s Bureau of Business & Economic Research, coal‒fired power plants support nearly $4.6 billion in total economic activity, support more than 5,600 jobs and provide $615.2 million in employee compensation, and contribute $315.1 million towards state and local tax collections.

“When the plants run harder … it benefits the ratepayers with lower electric rates, and it benefits the economy overall because you’re mining and supplying more coal,” Bostic said.

The PSC issued an order several years ago that set an expectation that coal-fired power plants need to achieve at least a 69% capacity factor in order for in-state electric companies to self-generate power and reduce reliance on purchased power.

A 2024 report published by the Public Energy Authority looking at Columbus-based American Electric Power, with West Virginia subsidiaries Appalachian Power and Wheeling Power, found that its three in-state power plants operated well below the 69% capacity factor in 2021.

However, PJM Interconnection – the wholesale energy transmission company serving West Virginia, 12 other states and Washington, D.C. – coordinates the movement of wholesale electricity, dispatching the power it needs for the regional grid on a minute-by-minute basis using the least expensive fuel sources first, such as natural gas and nuclear, then dispatching coal and renewable energy sources as needed.

PSC Chairwoman Charlotte Lane told committee members Monday night that the 69% capacity factor was a recommendation, not a mandate.

“Can we now require the utilities to operate at 69%? Yes, we can require them to do that,” Lane said. “The question is whether they can do it economically, and that is the problem. If they run at 69%, and it costs more than what they could buy off the PJM market, then ratepayers would suffer.”

James Bailey, representing the West Virginia Energy Users Group that includes major industries in the state, said SB 420 would raise rates on residential and commercial electric customers, driving up costs for businesses. He also said the vague language of the bill would likely be interpreted by electric utilities as a mandate due to some of the bill’s penalties.

“This legislation mandating the minimum capacity would inevitably increase rates,” Bailey said. “In the end, effectively we’re requiring the 69% capacity factor in this legislation … that will inevitably require at some point for the utility to bid into PJM at a price that is below their cost of operation, which means ratepayers will be required to pay the difference, including residential, manufacturing and industrial users.”

Lane also raised issues with the separation of powers between the PSC and the Public Energy Authority. While the three-member PSC is appointed by the governor with advice and consent of the Senate, it is an independent body, while the Public Energy Authority is within the state Department of Commerce.

“I find it problematic that this bill requires me to work hand-in-hand with the Public Energy Authority,” Lane said. “You just need to remember that we are an independent agency that was created by this Legislature, and the Public Energy Authority is part of the executive branch. And so, it would be a little problematic to be having the executive branch telling an independent agency how to operate.”

SB 420 remains in the House Energy and Public Works Committee on the mark-up and discussion phase. The bill also has a second committee reference to the House Finance Committee.