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Senate close to passing legislation allowing electric bill surcharges

The John Amos power plant next to the Kanawha River.

West Virginia lawmakers are getting close to passing a bill that would allow electric utility companies to place surcharges on people’s monthly bills in order to retrofit boilers at coal-fired power plants.

The West Virginia Senate’s Committee on Energy, Industry and Mining voted Tuesday to send the bill — HB 4435 — onto the full Senate, where it could be taken up later this week. The bill has already been approved by the House of Delegates.

The proposal, which is being primarily pushed by the West Virginia Coal Association, would give companies like MonPower, Potomac Edison, Wheeling Power and Appalachian Power the ability to change out equipment at coal-fired plants serving West Virginia customers without going through the traditional procedures that regulate electric costs in the state.

While the coal association hopes the law will entice companies to keep coal-fired power plants operating in the future, the bill would allow those companies to circumvent the normal approval process for utility projects by the Public Service Commission, the agency that regulates public and private utilities in the state.

Currently, electric companies are not able to recover the cost of projects like boiler upgrades without getting approval from the commission in a base rate case, which allows other parties to thoroughly question a utility company’s spending and requires lengthy evidentiary hearings on the issues that impact customers in West Virginia.

If the law passes, the regulatory process would be shortened and narrowed, allowing the company to recover the cost of those projects almost immediately through a separate charge that would be reviewed annually.

Officials with the utility companies said they did not ask for the bill, but the First Energy and American Electric Power subsidiaries weren’t against it either.

“We did not initiate or request this bill,” said Jeri Matheney, Appalachian Power’s director of communications. “We’re not pushing for the bill, but we are supportive of it.”

“While the coal industry introduced the bill, FirstEnergy does support it,” said Todd Meyers, a spokesman for MonPower and Potomac Edison.

Support for the measure, which was approved by 96 of the 100 state delegates, comes at a time when electricity rates have dramatically increased in West Virginia partly because of surcharges for increased tree trimming operations and spending on things like the takeover of large coal fired power plants, which are able to provide the utility companies with more power than their customers in the state currently use.

The introduction of the measure also follows the closure of several older coal-fired power plants serving West Virginia and increased competition in regional energy markets from natural gas plants and renewable energy sources, which continue to decline in price.

Bill Raney, the president of the West Virginia Coal Association, said everyone likes to bemoan the cost of the West Virginia utilities taking over coal plants that were owned by their parent companies, but they don’t like to talk about the federal mercury and sulfur air toxin rules that had a hand in the closure of 60- to 70-year-old power plants in the region.

The surcharge bill, Raney said, is meant to make it more appealing for First Energy’s and American Electric Power’s subsidiaries in West Virginia to keep coal-fired power plants running.

“It is an encouragement for them to modernize their boilers instead of shutting them down,” Raney said. “The objective is to keep as many coal miners working in West Virginia as possible.”

West Virginians currently receive the vast majority of electricity from the large coal plants like the Mitchell, John Amos and Harrison power stations.

While the cost of that power was expected to be supplemented by electric sales to out of state customers, the cost of electricity from those plants has fallen behind lower-priced, more efficient natural gas plants in the regional energy market, known as the PJM Interconnection.

Those market conditions are only expected to get worse in coming years as new natural gas plants in the eastern United States come on line.

Raney believes those market conditions could change if the severance tax on coal mined in West Virginia is reduced.

But West Virginia lawmakers declined to lower that tax Wednesday, and coal prices in the Central Appalachian region are already at their lowest point in years.

Matheney and Meyers said neither company has any plans to upgrade any of the plants that they currently operate in West Virginia, and even though MonPower has suggested it wants to buy another coal-fired plant in the region, Meyers said the company wouldn’t buy one that needs a boiler upgrade.

Reach Andrew Brown at andrew.brown@wvgazettemail.com, 304-348-4814 or follow @Andy_Ed_Brown on Twitter.

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