House again considers tax breaks for aging, struggling coal-fired power plants

CHARLESTON, W.Va. — The House of Delegates is again considering a tax break for struggling coal-fired power plants.

A bill that was passed out of the House Energy Committee on Tuesday afternoon serves as a sequel. Last summer, the Legislature passed a bill aimed specifically at providing relief for financially-troubled Pleasants Power Station.

This bill would affect plants beyond that, particularly the Mount Storm Generating Station, operated by Dominion Energy in Grant County. It’s possible the bill could affect the Longview Power Plant near Morgantown.

The tax cuts could amount to about $16 million, state Deputy Revenue Secretary Mark Muchow told members of the energy committee.

That’s a tough ask in a flat budget year, but those who support the bill say it’s money the state would never see if power plants go bust.

Last summer, analysts at Moody’s predicted that use of thermal coal for U.S. power generation could fall to as little as 11 percent by 2030. That’s largely because as aging coal-fired plants go offline they are being replaced by natural gas-fired plants.

“Most of the coal plants now are not operating at full capacity, yet they are being taxed as if they are at full capacity,” said House Energy Chairman Bill Anderson, R-Wood.

Under the bill being considered, those plants would be taxed at a rate of 45 percent of their capacity.

“That puts everyone on the same playing field, and it’s the reality of the state of coal-fired generation in the state today,” Anderson said. “It’s an attempt to provide relief to these plants that employ thousands of West Virginians and to allow them to continue.”

Chris Hamilton, president of the West Virginia Coal Association, said the potential relief is welcome.

“We fully embrace this concept, this action,” Hamilton said in the hallway after the House Energy meeting. “I believe in the case of Mount Storm, they have lost money four out of the last five years and by shaving off a little bit of their B&O tax it will allow that plant to run efficiently, productively for a greater period of time.”

In exchange, Hamilton said, the plant’s owner has agreed to keep the plant open at least another four or five years.

“So we’re fully supportive,” Hamilton said. “It’s very consistent with our primary objective, trying to extend the life of these plants, trying to extend the reliance on coal-fired electricity.”

The bill now goes to the House Finance Committee. It was passed out unanimously by the House Energy Committee.

Delegate Evan Hansen, D-Monongalia, was one of those who voted in favor of the bill. He said he doesn’t object to efforts to extend the lives of coal-fired power plants, potentially staving off an economic crash.

That’s particularly so, Hansen said, if the Legislature is also more willing to embrace alternative energy and efforts to diversify the state’s economy. He said that willingness has been apparent to him this year.

“This is one of the biggest challenges we’re facing in West Virginia, is how to address that decline in not just coal mining but coal-fired power,” he said.

“It’s having a huge effect on the state budget; it’s having a huge impact on jobs, local communities. It’s one of the biggest challenges we’ll have.”

He concluded, “Tax breaks like this might help in the short term, but they’re not going to change the long-term trend.”

Coal Fired Plant Tax Bill (Text)

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