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In limbo and in need of upgrades

Pictured is the John E. Amos coal-fired generating plant in Winfield. It’s one of three plants that Appalachian Power and Wheeling Power are asking West Virginia state utility regulators to approve $448.3 million in federally required environmental upgrades for after regulators in Kentucky and Virginia rejected their requests to approve wastewater treatment compliance work at the facilities, leaving the plants’ future in limbo.

Keeping the lights on in West Virginia used to be cheap.

In 2005, West Virginia had the lowest average residential electricity retail price in the nation, according to U.S. Energy Information Administration data.

By 2020, West Virginia wasn’t even among the lowest third of states nationwide in that category.

West Virginia ratepayers endured a 90% increase in average residential electricity retail price nationwide over that span. Only Michigan had a greater increase by percentage.

Kentuckians encountered a 65% climb. Virginians had a 48% rise.

“When I moved back to WV in 2004, my electric bill was around $100.00/month on APCO’s equal monthly payment plan,” Jon D. Tincher of Scott Depot wrote in a public comment filed with the West Virginia Public Service Commission earlier this month. “I now pay $232.00/month on the same plan. When will it end?”

Not anytime soon, if Appalachian Power and Wheeling Power get their way.

The AEP subsidiaries are asking West Virginian customers to pick up a burden of nearly $22 million per year from Virginia and Kentucky ratepayers.

That’s because utility regulators in those states denied Appalachian Power and Wheeling Power requests to approve federally required upgrades at three West Virginia coal-fired power plants on grounds they were uneconomic.

But the West Virginia Public Service Commission last month approved the wastewater compliance upgrades. They also approved a surcharge for the companies to recover costs for construction.

The commission’s blessing resulted in an increase of about 38 cents on monthly bills for the average in-state residential customer using 1,000 kilowatts a month. Revised estimates total $48 million annually, provided all wastewater treatment work is performed and recovered from only West Virginia customers and including state customers’ share of the cost for coal ash disposal.

That’s a 3.3% increase that would start in September 2022, according to Appalachian Power spokesman Phil Moye. The utilities say the total cost for all three plants to stay in compliance with environmental regulations is now $448.3 million.

Not making the wastewater treatment upgrades would require the plants to shutter in 2028 under U.S. Environmental Protection Agency.

Letting the John Amos, Mountaineer and Mitchell coal-fired generating plants in Putnam, Mason and Marshall counties keep operating through the end of their planned lifespans in 2040 would deepen West Virginia’s energy dependence on coal at ratepayers’ expense, say clean energy advocates.

Rapidly falling wind and solar prices have made renewable energy an increasingly competitive alternative to dwindling coal-fired generation.

From 2011 to 2021, 28% of the nation’s coal-fired electric generation capacity was retired, according to the Energy Information Administration. Coal accounted for just 23% of the nation’s net electricity generation overall in 2019. But coal-fired electric power plants accounted for 91% of West Virginia’s electricity net generation in 2019.

“The cost of doing little or nothing will mean higher electricity bills, a less diverse and weaker economy, and less money for families to support themselves,” Ted Boettner, senior researcher for the nonprofit Ohio River Valley Institute, said in an email.

The average monthly residential bill (as measured by the residential rate for 1,000 kilowatt-hours) for AEP’s West Virginia utilities escalated from $55.28 in 2006 to $138.57 in 2021 — an increase of 150% over 15 years.

An April Ohio River Valley Institute study found that while the nation’s average monthly electric bill went up by $11.82 from 2008 to 2019, West Virginia’s went up by $41.75.

“Rising bills reduce people’s disposable income, which in turn reduces economic activity and jobs,” Sean O’Leary, the study’s author, said in an email. “Unless West Virginia finds ways to become more energy efficient and embrace clean energy, that trend will continue.”

But clean energy proponents see a way to reverse that trend.

“[I]t’s unlikely a chance like this will come again in our lifetimes,” said Tim Cronin, a fellow at the West Virginia University College of Law’s Center for Energy and Sustainable Development.

Cronin and other energy experts hail an imperiled feature of Democrats’ proposed budget reconciliation framework.

It’s the clean electricity performance program, a carrot-and-stick approach to getting electricity providers to increase their use of renewable energy.

The $150 billion program would authorize grants for electricity providers that increase clean electricity use by 4% or more annually from 2023 through 2030 and penalties for those that don’t.

“It’s simple. A failure to enact [the clean electricity performance program] at the proposed level will mean higher electric bills and fewer jobs in West Virginia,” O’Leary said.

Proponents predict the direct pay incentive would keep ratepayers from bearing the cost of the energy transition.

They are even more bullish about the program’s ability to shore up West Virginia’s economy, pointing to a flurry of studies released in recent weeks touting the proposed program’s potential to spur millions of dollars of investment in West Virginia and throughout the country.

But West Virginia’s senators, who hold pivotal voting power in the evenly divided upper chamber of Congress, aren’t on board.

Like all congressional Republicans, U.S. Sen. Shelley Moore Capito, R-W.Va., has opposed Democrats’ budget reconciliation package. She introduced a failed amendment last month for the 10-year, $3.5 trillion budget resolution that would have allowed the Senate Budget Committee chairman to limit or prohibit a federal clean energy standard imposing higher energy costs on low-income households or causing coal or natural gas workers to lose their jobs.

Sen. Joe Manchin, D-W.Va., a conspicuously crucial swing voter as a centrist and chairman of the Senate Energy and Natural Resources Committee, signaled in a Sept. 12 interview with CNN that he opposes the program.

Asked if he supports clean energy provisions in the budget reconciliation package, Manchin noted the declining share of electricity produced by coal.

“Now they’re wanting to pay companies to do what they’re already doing,” said Manchin, whose office did not respond to a request for comment for this story. “Makes no sense to me at all for us to take billions of dollars and pay utilities for what they’re going to do as the market transitions.”

But there’s ample evidence West Virginia’s investor-owned electric utilities have not been doing what the clean electricity performance program would pay them to do at the pace the program would demand.

‘Repercussions for investment portfolios’

In a letter to the House Energy and Commerce Committee, AEP Senior Vice President of Governmental Affairs Tony Kavanagh said the clean electricity performance program “is forcing clean energy development too rapidly.”

Kavanagh argued the program would adversely affect electric grid reliability and that renewable energy demand would exceed supply. He objected to the program penalizing electricity suppliers for failing to meet clean energy targets, saying clean energy deployment will be uneven over the program’s eight years.

“The assessment of these arbitrary and punitive payments could have repercussions for investment portfolios that include stock for investor-owned utilities,” Kavanagh complained.

AEP has touted progress toward its goal of net-zero carbon dioxide emissions by 2050, including a 74% reduction in carbon dioxide emissions from 2000 to 2020.

But the company’s resource portfolio still hasn’t made the pivot to renewable energy.

Hydro, wind, solar and pumped storage composed 18% of AEP’s generating resource portfolio as of April 2021 — just 14 percentage points more than they combined for in 1999. That’s a net annual increase of only 0.63 percentage points over 22 years. AEP has a target of raising that share to 51% by 2030 — still only 3.7 percentage points a year.

The utility’s portfolio consisted of 43% coal and 28% natural gas as of April — clips the company plans to scale to 18% and 21%, respectively, by 2030. Those would be 2.8- and 0.8-percentage point drops per year.

That targeted 21% portfolio share for natural gas – which does not qualify as clean energy in the proposed program — would be just 1 percentage point less than it was for the company in 1999.

Carbon dioxide emissions at the Mountaineer facility increased 34.3% from 2013 to 2019, per Energy Information Administration data. The site’s total emissions rose more than 2.6 million metric tons, more than offsetting the less than 500,000-metric ton, 9.7% drop in the Mitchell facility’s emissions over the same span.

The Amos facility’s carbon dioxide emissions dropped 32.2% during that span but remained above 9 million metric tons in 2019, the highest of the three facilities whose fates could soon be decided by the West Virginia Public Service Commission.

FirstEnergy is about two thirds of the way toward reaching an interim target of a 30% reduction in greenhouse gas emissions within its direct operational control by 2030, FirstEnergy spokesman Will Boye said.

But that target is based on levels from 2019, a year the company’s Fort Martin and Harrison power stations in Maidsville and Haywood combined to emit more than 18.6 million metric tons of carbon dioxide.

A January report from the Sierra Club examined the decarbonization efforts of 79 operating utility companies across the country, including Appalachian Power, Mon Power and Wheeling Power, by analyzing their integrated resource plans. Such plans identify the type, amount and timing of resources utilities say they need to meet expected electricity demand over a long-term period.

The Sierra Club graded utilities based on how quickly they are transitioning from fossil fuels to clean energy and gave low marks to West Virginia’s electric providers.

The report found Appalachian Power had the fifth-highest amount of remaining coal capacity without a 2030 retirement commitment among all operating companies. Appalachian Power got an ‘F’ grade with a score of 7 of 100 due to having 0% of its coal fleet committed to retire by 2030 and 13% as much clean energy planned as existing fossil fuel energy.

Mon Power, a FirstEnergy subsidiary, and Wheeling Power both got scores of 0 of 100, having no coal plants committed to retire by 2030 and coming up short on clean energy plans.

‘Simple arithmetic’

Mark Dyson, senior principal with the nonprofit Rocky Mountain Institute, alludes to some troubling numbers when contesting Manchin’s stance that the clean electricity payment program would pay electric providers to do what they’re already doing.

He calls one of them “the simple arithmetic of climate change.”

“Utilities that make commitments to net zero by 2050, great, but I would argue only a few of them are moving fast enough,” Dyson said.

An Intergovernmental Panel on Climate Change report released last month predicts that for 1.5 degrees Celsius of global warming, there will be increasing heat waves, longer warm seasons and intensifying rainfall in the eastern United States.

The report finds that limiting warming to close to 1.5 degrees Celsius or even 2 degrees Celsius will be out of reach unless there are immediate and large-scale reductions in greenhouse gas emissions.

West Virginia’s 14 electric power plant sites that combined to emit 62.6 million tons of carbon dioxide in 2019. West Virginia’s per capita energy-related carbon dioxide emissions were third-highest in the country in 2018 and decreased less than 14% from 1990 to 2018.

A report released Thursday by the independent economics consulting firm Analysis Group found a clean electricity payment program would result in an increase of 7.7 million jobs, a $907 billion economic boost and $154 billion more in increased tax revenues for federal, state and local governments by 2031.

The analysis includes renewable energy, nuclear, low-emission fuel (like synthetic gas) and carbon capture and sequestration as qualifying sources as well as 10-year clean energy tax incentives.

An analysis released last month by environmental scientists and public health experts found a clean energy standard like the one pending in Congress would prevent more premature deaths per 100,000 people in West Virginia than in any other state except Kentucky.

Reaching the program’s 2030 carbon emissions reduction goal would add 3,508 full-time jobs here, swell total earnings for state residents by $172 million through 2040 and bring $20.9 billion of investment in new power plants, according to a report by West Virginia University researchers and economic modeling experts.

“So the question is, why in the world would we not want to create thousands of jobs and reduce our energy costs by billions of dollars while securing a place for West Virginia in the 21st-century energy economy?” Cronin said. “We have a rare opportunity to take advantage of this moment thanks to Senator Manchin’s leadership. I’m hopeful he’ll find a way to bring this deal home for West Virginia.”

Manchin has touted an “all of the above” energy approach. In a Senate financial disclosure filed in May, he reported making $491,949 in dividends and interest in 2020 from Fairmont-based Enersystems Inc., the coal brokerage he founded in 1988.

Those like Manchin who see coal as a viable part of West Virginia’s energy future cite recent estimates by John Deskins, director of the West Virginia University Bureau of Business and Economic Research, finding that coal-fired power generation supports $4.8 billion in state economic output, $725 million in employee compensation and $97.3 million in tax revenue.

But those numbers are likely to keep falling.

There have been 10 conventional steam coal plants retired in West Virginia since 2005, and there are only nine left in the state.

The cost of going it alone

Dollar figures, not energy data or job estimates, were mentioned most during the public comment hearing the Public Service Commission held Friday morning on Appalachian Power and Wheeling Power’s latest proposal to make West Virginia ratepayers bear a greater burden.

Stephanie Hysmith recalled her Charleston power bill was $79 in 2011. Now she’s paying $170 a month.

“That’s sizable,” Hysmith told the commission, “and I wouldn’t mind paying that extra money if I knew that AEP was sourcing its power from renewable energy.”

“It is patently unfair for West Virginian ratepayers alone to be burdened with nearly half a billion dollars in cost responsibility that should be shared by ratepayers in two other states,” Gaylene Miller, West Virginia state director for AARP, said to the commission.

The numbers suggest sticking with coal-fired generation means going it alone for West Virginia.

Boettner and other clean energy advocates see the clean electricity performance program as the last best chance for the Mountain State to avoid falling further behind.

“West Virginia can’t afford to let this golden opportunity get away,” Boettner said.

Mike Tony covers energy and the environment. He can be reached at 304-348-1236 or mtony@hdmediallc.com. Follow @Mike__Tony on Twitter.

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