The state Senate Energy, Industry and Mining Committee heard opposing perspectives at its meeting Thursday from coal industry and electric utility representatives on a bill it’s considering designed to keep West Virginia’s dwindling fleet of coal plants operating as long as possible by requiring in-state power producers to maintain 2019 coal consumption levels.
Senate Bill 542 would require power producers to file compliance plans every three years with the Public Energy Authority specifying their fuel supply and how 2019 coal consumption levels would be maintained.
West Virginia Coal Association and United Mine Workers of America representatives enthusiastically endorsed the bill to the committee, but representatives from Appalachian Power, FirstEnergy and Dominion Energy as well as state Public Service Commission Chairman Charlotte Lane all expressed reservations with the bill.
The committee opted to hold off taking action on the bill, and Sen. Randy Smith, R-Tucker, committee chair, recommended that the stakeholders present meet with Sen. Rupie Phillips, R-Logan, committee vice chair and sole sponsor of bill, to detail concerns further with an eye toward a potential compromise.
Chris Hamilton, president of the West Virginia Coal Association, praised the bill, arguing it was needed to support the state’s struggling coal industry.
The legislative findings in the bill state that West Virginia coal shipments have been reduced from 162 coal plants a decade ago to only 43 plants currently and that 18 coal-fired electric units have been forced to close.
Hamilton estimated that coal is still responsible for about 20% of the state’s economy and referenced a warning from Appalachian Power and Wheeling Power in a recent rate case that they may close the Mitchell coal-fired generating facility in Marshall County in 2028, 12 years ahead of schedule, if the companies choose to retire the plant rather than make an additional investment to ensure that the plant complies with federal guidelines limiting wastewater to continue operating beyond that year.
The Coal Association filed a petition to intervene in the rate case last month, saying that the demand for coal mined by its members could be “radically altered by the outcome of this proceeding.”
“This provides the Public Energy Authority with the opportunity to become a little more engaged with [utility resource planning] and use it to keep these plants open as long as we possibly can,” Hamilton said of SB 542.
“We got a lot of members mining coal. We want to keep them here and mining coal,” UMWA representative Chad Francis said in support of the bill.
The bill directs the Public Energy Authority to coordinate with the Public Service Commission to review electric utilities’ integrated resource plans, documents which the commission already to be filed every five years identifying the type, amount and timing of resources utilities say they need to meet expected electricity demand over a long-term period.
The measure would require public utilities to give notice to the West Virginia Office of Homeland Security and Emergency Management, Public Energy Authority, Public Service Commission and the Legislature’s Joint Committee on Government and Finance before announcing the retirement of a coal-fired unit or proposed sale of a plant to another operator.
Lane cautioned that she thought the bill ran the risk of duplicating responsibilities between the Public Service Commission and the Public Energy Authority and would have an adverse impact on ratepayers.
Appalachian Power and FirstEnergy representatives said the bill was uneconomic and would introduce unnecessary costs for the companies that they would then have to transfer to ratepayers.
“We think unfortunately the bill may be a solution to a problem that’s not really there,” said FirstEnergy representative Sammy Gray, who added that FirstEnergy intends to keep coal units operating in West Virginia as close as it possibly can up to 2050, when the company has pledged to achieve carbon neutrality.
The bill would also force power producers to maintain a 90-day fuel supply onsite, which representatives from Appalachian Power, FirstEnergy and Dominion Energy told the committee was a much greater supply than they currently keep onsite.
Hamilton said the coal industry is “well aware” that an energy transition is ahead of it 20 to 25 years from now.
“We believe that transition is starting now, not in 20 or 25 years, and I think the market is bearing fruit to that,” Appalachian Power President and Chief Operating Officer Chris Beam told the committee. “… What is happening to the industry is not a winner or a loser, it’s an economics decision. What’s happening is these units are no longer economical. You cannot and should not force onto the customer an uneconomical solution.”
John Scalzo, regulatory and finance vice president for Appalachian Power, estimated that just having a 90-day coal supply on the ground at any given time would require buying $145 million of coal and instituting a $15 million rate increase to ensure a return for the company.
Smith asked the bill’s stakeholders to return for another committee meeting Tuesday.