Published: March 23, 2021 |

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The House Energy and Manufacturing Committee on Tuesday advanced a bill to the full House to benefit the state’s struggling coal industry. The bill would allow utilities to apply to the state Public Service Commission for expedited recovery of costs for installing and maintaining environmental pollution control equipment.

Utilities currently finance environmental pollution control equipment costs through base rate cases. Energy-use groups fear that expedited cost recovery could cause rates to increase.

Proponents of House Bill 2959, which at Tuesday’s meeting included West Virginia Coal Association President Chris Hamilton, held that the legislation would help keep coal-fired power plants in environmental compliance and in service to the economic benefit of those who work at the plants and the communities where the plants are located.

“In these times of uncertainty, this bill and the expedited recovery provides a little more certainty and predictability to the process,” said West Virginia Coal Association President Chris Hamilton.

But Jason Pizatella, an attorney representing the West Virginia Energy Users Group, an association of large, energy-intensive industrial, chemical and manufacturing companies, said the bill would result in a rate hike.

“[T]hese types of bills, where you have accelerated cost recovery ... cause rates to go up, and they will do so in this case,” said Pizatella.

He said HB 2959 would affect all 20 to 25 large users of American Electric Power and FirstEnergy supply that comprise the Energy Users Group. Pizatella added that the group is not against environmental compliance cost recovery but takes issue with the quickened surcharge-making process it would implement, which he said would prevent a fully litigated base rate case before the PSC.

The bill would eliminate a requirement that utilities’ cost recovery be based on investments that are “used and useful.”

“By eliminating the ‘used and useful’ terminology that’s in current law, it means that the risk of that investment is shifted from the utilities and their shareholders onto ratepayers before that investment ... is providing actual benefit to the customers,” Pizatella told the committee.

If the bill becomes law, ratepayers will see surcharges on their bills to cover PSC-approved requests from utilities for pollution control compliance upgrades.

The legislature already approved expedited cost recovery for electric utility coal-fired boiler modernization and improvement projects in 2016.

Appalachian Power and Wheeling Power said in a December filing with the PSC that the Mitchell coal-fired generating facility in Marshall County would cease operation in 2028, if the companies choose to retire the plant rather than make an additional investment to ensure that it complies with federal guidelines limiting wastewater to continue operating beyond that year.

The companies reported that performing only coal-combustion residual compliance work at Mitchell and retiring the plant in 2028 has “comparable costs and benefits” to making an additional wastewater compliance investment to allow the plant to operate beyond 2028 to the end of its projected useful life in 2040. Replacing a portion of the retired Mitchell capacity with a portion of Appalachian Power’s excess capacity in 2028 would result in savings to West Virginia customers of approximately $27 million annually from 2029 to 2040, the companies said in the Dec. 23 filing.

Appalachian Power and Wheeling Power are seeking permission to perform all the work at all of the plants, which they estimate would cost $317 million, and listed potential project-related residential, commercial and industrial rate increases of 1.59 percent, 1.52 percent and 1.72 percent, respectively.

The Coal Association last month weighed in with a petition to intervene in the case. It said the demand for coal mined by its members could be “radically altered by the outcome of this proceeding.”

The advancement of HB 2959 comes a week after the Senate Energy, Industry and Mining Committee referred to the Senate Judiciary Committee a watered-down version of Senate Bill 542. SB 542 would require power producers to maintain a 30-day fuel supply onsite. Producers also would need to inform the PSC, state Office of Homeland Security and Emergency Management, the Legislature’s Joint Committee on Government and Finance, and the long-dormant Public Energy Authority before announcing the shutdown of a coal-fired unit.

The original version of SB 542, which has yet to be taken up by the Senate Judiciary Committee, would have required in-state power producers to maintain 2019 coal consumption levels and a 90-day fuel supply onsite. Both of those provisions were removed after utility representatives expressed reservations with the bill, saying it was uneconomic and would introduce unnecessary costs for the companies that they would then have to transfer to ratepayers.

Emmett Pepper, policy director at Energy Efficient West Virginia, blasted HB 2959 and SB 542 after the committee’s meeting.

“Senate Bill 542 is just very clearly a giveaway to the coal industry, taking away power from the utilities, and this bill basically puts all the power in the utilities’ hands, but both bills are at the expense of ratepayers. Both bills take away power from ratepayers and their abilities to examine and to scrutinize and to question what is best for them,” said Pepper.

HB 2959 would make holding a hearing on a utility’s application under the proposal optional, and if the commission receives no “substantial opposition” within 60 days of notice of the application being published, the hearing can be waived.

“We make a call as to whether or not we think it’s substantial. Now, if we had a thousand people, yes, that would be substantial. If we had 20, I’m not sure that that would be substantial,” PSC Chairman Charlotte Lane told the committee.

“This seems to be taking away the power for regular citizens to protect themselves from high electric bills and rates and giving power to the utilities,” said Pepper.

West Virginia Consumer Advocate Division head Robert Williams said the bill wouldn’t affect the public’s ability to intervene in cases. He said it would make cases more complicated and could result in a request from his division of the PSC, which has a separate budget and staff from the commission, to hire outside experts to deal with a rise in technical issues in cases he expects the bill to cause.

The bill would not apply to previously completed or scheduled environmental compliance projects, Lane said.

Source: Charleston Gazette-Mail

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