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Senate, too, moves bill providing tax breaks for aging, struggling coal-fired power plants

CHARLESTON, W.Va. — The Senate Finance Committee quickly voted for a bill that would give tax breaks for aging, struggling coal-fired power plants.

Democrats on the committee asked several questions about Senate Bill 793 that weren’t clearly answered, but a majority of committee members voted in favor of moving the bill to the floor after a discussion of about 15 minutes.

The House Energy Committee approved a similar bill just the prior day. That one is also assigned to House Finance.

State revenue officials have said the tax cut could amount to $16 million.

Bill Ihlenfeld

“Who would benefit from this bill?” asked Senator Bill Ihlenfeld, D-Ohio, later asking if the bill was written with any particular power plant in mind.

The answer from Deputy Revenue Secretary Mark Muchow didn’t specify any particular power plant operator. Instead, Muchow spoke of the challenges coal-fired power plants are currently facing.

“It’s a tough outlook for coal-fired power plants,” Muchow said.

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.

“So basically this bill is an attempt to go against the trend of these power plants shutting down all across the country,” said Senator Corey Palumbo, D-Kanawha.

Mark Muchow

Muchow said it’s an effort to extend the lifespan of power plants that contribute to the state and local economic base.

“They’re big taxpayers. If they shut down it has a big impact on the local community and also the state treasury,” Muchow said.

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

Operators seeking that tax relief would promise to keep the power plant open until 2025. If not, the bill says, any business and occupation tax savings achieved in the interim would have to be remitted back to the state.

Muchow said that clause could be limiting the companies seeking the tax relief.

“There may be some uncertainty about whether they would remain open until 2025.”

Palumbo, in conversation after the meeting, said that hard reality makes judging such bills challenging.

“I think it’s just a difficult thing to fully wrap your mind around,” he said. “It’s going to be a tax break for these coal-fired plants. We heard that two-thirds of them over the course of the next five years are going to be retiring probably regardless of what we do,” he said.

“On the other hand, we know that a vast majority of the Fortune 500 companies that are looking for a place to locate, a significant factor in their relocation decision is having a renewable energy portfolio available to them.”

Chris Hamilton

No power company representatives were called forward during the meeting to testify. The West Virginia Coal Association didn’t appear to have any representation in the committee room.

The prior day outside the House Energy Committee, West Virginia Coal Association President Chris Hamilton acknowledged the organization favors the legislation.

Last summer, the Legislature passed a bill aimed specifically at providing relief for financially-troubled Pleasants Power Station.

This one might particularly help the Mount Storm Generating Station, operated by Dominion Energy in Grant County.

“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.”

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