West Virginia’s governor has pushed complex legislation intended to allow developers, particularly data centers, to harness localized, self-sufficient energy systems. Senator Rupie Phillips, in questioning the assumptions, boiled his critique down to a simple statement.
“Mamaw can’t afford it,” Phillips, R-Logan, said during remarks on the Senate floor last week.
He continued by saying that big users can bring down costs for others: “It’s real simple. I think everyone in here has heard as far as water and sewer goes, the more people you have online, the cheaper it is. Same thing with the grid. The more people on the grid, it lowers the rate payers.”
This is the question that could be played out as lawmakers debate the “Power Generation and Consumption Act” during the final third of the regular legislative session: What is the tradeoff between allowing greater flexibility for developers to access their own power framework versus the cost effects for everybody else?
Details with TJ: Microgrid Bill and Baloney
The 27-page bill, which is numbered in the state Senate as SB818, introduces a Certified Microgrid Program and a High Impact Data Center Program for West Virginia, aiming to attract and support these industries.
The version in the House of Delegates, HB 2014, is on the agenda for that chamber’s Energy Committee to consider about 3 p.m. Monday.
Strategically positioned
Much of the legislation is focused on data centers, the physical facilities that house computer structures like servers and storage.
“Data centers represent a significant and growing sector of the economy, generating substantial economic activity, including jobs, infrastructure investments, and technological innovation,” the bill states.
West Virginia is strategically positioned to place data centers, the legislation concludes, because of its close proximity to Washington, D.C., and the federal government; its proximity to East Coast population centers; its relatively low tax rates and low regulatory environment; and its supply of energy and natural resources.
“Data centers have historically obtained their electricity from the electric grid. Some data center developers now seek or require the use of microgrids to provide their primary and backup power,” the bill states.
The bill outlines certification processes, incentives and exemptions, including modifications to utility regulations and tax structures.
In the microgrid piece of the legislation, the secretary of the Department of Commerce can identify and certify the districts following conclusions that there would be a significant and positive economic impact for the state.
An industrial plant or facility choosing to locate and operate within a certified district must represent a new electric generating load to take advantage of the program’s provisions.
Assurances from energy chairman
Senate Energy Committee Chairman Chris Rose, R-Monongalia, says he is receptive so far to what the governor is trying to achieve in the proposed legislation.
“I think it’s a very well thought out and laid out, comprehensive bill. I think he looked at an all-of-the-above energy approach,” Rose said in an interview before a Senate floor session last week.
Rose credited the Morrisey administration with looping in representatives of the coal and natural gas industries as well as the potential developers of data centers and microgrids. “So far, my first look at it, I think it’s a very well-thought out bill,” the senator said.
In terms of spreading out the cost of electricity production, Rose said he is assured by provisions that “if a microgrid is on the electric grid, whether it be AEP, Mon Power, etc., that the microgrid would bear the cost of that reserve power, not residential customers of West Virginia.”
‘The big development’
Standing behind a podium with a sign that said, “West Virginia powers America,” Gov. Patrick Morrisey introduced the proposed policies during a press conference last week. He elaborated on his administration’s aims during an appearance on MetroNews’ “Talkline.”
Patrick Morrisey
“It’s a really big investment in West Virginia. If you care about economic development, people haven’t seen a bill like this in many, many years,” Morrisey said on statewide radio.
He suggested the policies would streamline the process for big developers to establish their power supply: “Establishing these microgrids allows you to tap into the local energy source and then you can get it done faster.”
The governor expressed optimism that the legislative framework would help West Virginia recruit more data centers.
They are enormous energy users, and that is only expected to grow as artificial intelligence and other computing innovations gain traction. Data centers are prolific in states like neighboring Virginia, but they are also controversial among residents because of their aesthetics and noise. They are not major employers but can contribute significantly to local property taxes.
“Best case scenario is that we know that there are a number of data centers that are knocking on our door right now, and this might put a number of them over the top,” Morrisey said.
“And if that happens, not only are there immediate construction jobs, but these folks come in and start to build these data centers — a lot of the property tax value for a lot of these areas goes up tremendously, and then the resources start to come in to fill up those buckets, to dramatically lower the income tax, to finally have a dedicated source for economic development, to stabilize the grid, which, right now, has problems.”
The governor continued, “This is the big development, bigger than anything you’ve seen in years.”
In terms of the potential costs to regular West Virginians, Morrisey described aspects of the bill meant to be safeguards.
” I think when people talk about the cost that will occur, we’re making sure that consumers are going to be protected. To me, that’s important. I want to look out and protect consumers,” Morrisey said.
“That gets to the issue of who’s paying for some of the upgrades and the stabilization fund that’s in place, which I think is really critical. There’s a good balance here, right? Because there’s some people who said, why should you have a stabilization fund? I want to protect consumers. I think that’s important anytime you’re making changes that may affect the grid.”
‘Harmful to ratepayers’
There’s more to the bill than meets the eye, said Emmett Pepper, policy director for Energy Efficient West Virginia.
“My concern is, how is this going to affect ratepayers,” Pepper said on “Talkline.” “As we all know, our electric bills, at least in the southern part of the state, have doubled in the last 15 years, so we want to make sure anything that is in there is not going to be harmful to ratepayers.
“Sadly, there is a lot that’s going to be harmful to ratepayers.”
· Emmett Pepper on WV microgrid bill
Pepper noted that it’s actually two-part legislation. Most of the bill is about data centers and microgrids. And then the last five pages have a different focus.
One provision, he said, requires power plants “be able to achieve” a 69% capacity factor, in other words, run 69% or more of the time. He said that would require coal contracts to keep coal coming every month or week, and other preparations, that will put the utilities in a position where they have to run their power plants at a loss.
He also questioned whether the bill would create loopholes for automatic rate increases. The bill spells out “automatic adjustments” that would now be allowed if someone justifies that the rates would already be going up by that much or more.
The bill explicitly says that it is doing this to increase coal-fired generation demand, not to protect ratepayers, Pepper said.
“The guiding star,” Pepper said, “should be what’s going to be best for ratepayers.”