Appalachian Power is not a fan of a bill characterized as ensuring power system reliability is a key factor when regulators determine if utility costs are fair and reasonable for ratepayers.
Officials with the power company contend that if the bill becomes law, the most likely result would be higher rates.
“Senate Bill 505 aims to change how we consider different electricity generation sources, focusing on factors beyond cost,” said Aaron Walker, president and chief operating officer.
“If this is the path the legislature chooses, we will align with the state’s policy, but this change could lead to higher electricity bills for our customers.”
Senate Bill 505, “Ensuring Reliable and Affordable Electricity Act,” includes guidelines for utilities seeking rate adjustments, particularly when they’re adding or removing generation and transmission assets. The focus is on their impact on grid reliability during peak demand.
Utilities would need to provide detailed evaluations of asset capabilities, and the West Virginia Public Service Commission would be mandated to make explicit findings on whether the requirements are met, potentially disallowing cost recovery for assets considered unreliable.
The Senate Energy Committee took up the bill last week and advanced it to the Senate Government Organization Committee.
In a few moments of voluntary testimony, Public Service Commission Chairwoman Charlotte Lane said the legislation doesn’t add up to anything the commission isn’t already doing — although she said it does mandate additional bureaucratic work.
Lane is a former Republican state delegate and a former member of the U.S. International Trade Commission. One of her colleagues on the PSC, Bill Raney, is retired president of the West Virginia Coal Association.
After the bill’s advancement from the Senate Energy Committee last week, supporters and some senators gathered for an event that was part press conference and part celebration.
Chris Hamilton, the current president of the coal association, said the state legislation would “cause and motivate our state coal fired electric generators that provide that base load, reliable and affordable power, to run more frequently. And when they run more frequently, they run more efficiently.
“They also result in additional coal supplies and coal miners working. And most importantly, they provide the basis to see our industrial and our residential electric rates to be stabilized at the minimum and perhaps and hopefully even lowered going forward.”
Appalachian Power and Wheeling Power have about 460,000 customers in parts of 25 counties of West Virginia.
Walker, the company president, said the companies use a diverse approach to generating electricity, which helps keep costs down and attract new customers while retaining existing ones.
“If this bill passes, it would negatively impact our ability to meet the needs of our new and existing customers who require a diverse generation portfolio. It may also make it difficult for us to obtain the resources needed for competitiveness in today’s global market,” Walker said.
“Additionally, the bill allows the Commission to change how costs for existing resources are recovered based on how much they are used. Since the usage of these resources depends on their cost compared to other options, the uncertainty created by this bill could make it challenging to retain and attract business in West Virginia.”
Americans for Prosperity-West Virginia, which often promotes free market policies, favors the bill and says it is a priority. The lobbying organization sent a memo to lawmakers to urge support, suggesting vote could be recorded in a legislative scorecard.
“This legislation will protect electric utility ratepayers from paying for electric generation and transmission that does not meet reliability standards while incentivizing the use of reliable power generation methods and shoring up grid stability,” wrote state director Jason Huffman.
Huffman continued by saying that reliable, affordable energy is a cornerstone of West Virginia’s history and traditions.
“Sadly, former President Biden’s failed economic agenda—which had as it’s cornerstone a forced energy transition away from reliable sources of power — has artificially propped up unreliable energy sources at the expense of West Virginian ratepayers,” he wrote.
“Wind and solar generate less electricity less reliably than does coal, nuclear, and natural gas. Despite this fact, utilities can frequently recover the full cost of these unreliable assets while still earning a profit — in part, by passing these costs off to ratepayers.”