There’s no questioning the good intentions behind efforts to “protect West Virginians” by keeping the state’s coal plants running and holding utilities accountable. But Senator Brian Helton’s proposed legislation — which would force coal units to run at least 69 percent of the time or lose the right to ask for rate adjustments — misunderstands how the power grid actually works. Worse, it could raise electric bills and make the grid less reliable.
How the Grid Really Works
Our electric grid isn’t political. It’s based on engineering and economics. In PJM — the regional system that includes West Virginia — power plants are called on to run in order of cost and efficiency. The cheapest, most efficient power runs first. That’s what keeps electricity affordable.
Helton’s bill would blow up that logic. It would require utilities to run perhaps more expensive plants even when cheaper ones are available. Imagine forcing a $70 per megawatt-hour unit to run while a $40 unit sits idle — that’s not “accountability,” that’s waste. Under the current system, if the state’s coal plants are cheaper, they’ll run. If they aren’t, they won’t.
Forcing them to run no matter what doesn’t make the system stronger — it makes it weaker and costs ratepayers more.
Mixing Apples and Oranges
The proposal also mixes up two different markets that keep the lights on: capacity and energy.
- Capacity means being available when needed, if needed, to generate electricity — kind of like tax dollars paying for a fire department to stand ready when it’s needed. It’s about ability and having power plants to generate electricity to meet peak demand.
- Energy is the actual electricity produced – the electricity used in homes and businesses. Energy markets are designed to use the cheapest energy first – that means using the least expensive capacity first to generate electricity. As more electricity is needed, more capacity is dispatched to generate more electricity.
Helton’s proposal seemingly treats these as the same thing. But they’re not. Forcing plants to run all the time, at least 69 percent of it, would mean they get paid twice — once for being available, and again for power that wasn’t the cheapest available. Paying for capacity is one thing, but why should ratepayers or the utility pay for energy that wasn’t the cheapest available? They shouldn’t.
The Regulatory Compact
Helton says he’s holding monopolies accountable. Accountability is good. But utilities are already held accountable under what’s called the regulatory compact. They must serve everyone reliably and affordably — and in return, they can recover their reasonable costs.
If the state orders utilities to run inefficiently but then bars them from recovering those costs, it breaks that compact — and possibly the Constitution. Courts have said for decades that forcing utilities to operate at a loss violates due process and the “just and reasonable” standard for rates. *
Since PJM’s markets are federally regulated, a state law like this might not even hold up in court?
The Trump Factor
President Trump is a fan of coal. That is well documented, as are his orders to keep coal plants online. His administration has issued orders to prevent coal unit retirements on several occasions
But, he has never ordered those plants to run. Instead, his orders have mandated the plants be available (capacity) and be subject to economic dispatch.
If the president understands and abides by economic dispatch, shouldn’t West Virginia legislators?
Accountability
If lawmakers truly want accountability, the right path isn’t to dictate how power plants run — it’s to leave regulation to the PSC, FERC and the grid operator. Continue to give the regulators and operators the data, independence, and authority they need to make sure utilities are operating prudently and keeping rates fair.
Consumers may not like rate increases, and utilities may not like all of the regulations – when both parties like some parts of the deal and dislike others, that’s usually the sign of a fair deal.
Helton’s proposal might sound like it’s standing up for West Virginians, but in reality, it could do the opposite — raising bills and weakening the system that keeps our lights on.
The legislature should refuse to pass it.
*Cases of note:
Bluefield Water v PSC
FPC v Hope
Duquesne Light Co. v. Barasch
Editor’s Note: Meadows is a former federal policy director for American Electric Power. His views are his own and do not reflect any other entity or organization.