The West Virginia Public Service Commission has entered revised rules governing electric generating capacity.
Much of the public debate has been over how specific requirements could push utilities to run coal plants more or whether the policies would result in higher electricity prices for consumers.
“I think the Commission’s rules encompass a lot of complex issues pertaining to how West Virginia’s electric utilities operate their power plants as part of the PJM system,” said Derrick Price Williamson, executive director of the West Virginia Energy Users Group, which represents many of the state’s largest industrial power consumers.
“I think most importantly from a customer affordability standpoint is that those rules make clear that no power plants should be dispatched – regardless of fuel source — if doing so is uneconomic, meaning operating those plants would cause captive ratepayers to bear more costs for power than the market would otherwise provide.”
He added, “Given that existing West Virginia business and industry and everyday West Virginians are struggling with power affordability, it is critical that the rules capture this protection.”
Last year, the Legislature passed a sweeping policy called the Power Generation and Consumption Act with most of the focus on data centers and their power sources. The Public Service Commission’s role addressed different matters, though.
The bill required the Public Service Commission to evaluate capacity auctions conducted by PJM Interconnection, and review each generating unit’s current economic dispatch to ensure they could meet future needs. PJM is this area’s regional energy grid, which oversees the allocation of electric-power in a 13-state area.
The policy passed by the Legislature also required utilities to maintain their generating units and fuel inventories to allow them to achieve at least a 69% capacity factor.
Electric utilities must submit detailed monthly generation dispatch reports and extensive fuel inventory data to ensure energy is produced at the lowest possible cost.
The Public Service Commission was assigned to propose rules for legislative approval to reflect its new duties and responsibilities under the law.
Commissioners produced an initial draft and then went through a process to receive comment from the public and businesses on the proposals.
Electric utilities and consumer advocacy groups argued that the proposed rules improperly converted the 69% capacity factor into an operational mandate and forced self-scheduling, which would inflate ratepayer costs and create duplicative reporting burdens.
Lots of individual citizens filed comments expressing strong concern that uneconomic plant dispatching would unnecessarily increase public utility bills.
The West Virginia Coal Association and the United Mine Workers union contended the regulations were too weak, advocating for mandatory self-scheduling and strict operational requirements to boost in-state coal use.
Natural gas organizations urged fuel-neutral policies and recommended rigorous evaluation of large-load demand forecasts, such as those for data centers.
A 51-page PSC order was entered this past week, reflecting specific changes from the public comment.
One change incorporates the exact statutory language of state code, clarifying that requiring utilities to maintain units to achieve a 69% net capacity factor is a maintenance and operational-readiness standard.
And the revised rule explicitly states that utilities are not required to operate a unit at 69% net capacity factor if doing so would increase electric charges for ratepayers.
The PSC specified that capacity factors will be accumulated and evaluated over rolling 12-month periods rather than enforced as an immediate or hourly operational requirement.
The Gas & Oil Association of West Virginia appreciates the revisions clarifying that utilities are not required to operate at a 69 percent capacity factor “when doing so would increase customer charges,” said Rebecca McPhail, executive director. “The change addresses an affordability concern raised by us and other West Virginians as rising costs are impacting us all.
“Our primary focus remains providing the fuel to deliver reliable electricity for the lowest cost to customers. That means allowing the free market, not government mandates, to drive fuel choice. The revised proposal makes progress on that front.”
Next up, the Legislature will review what the PSC has submitted.
“While we expect to have suggestions for the Legislature as it reviews these rules, from a ratepayer perspective, the final rules are much improved from the initial draft. Nearly all parties raised similar ratepayer impact concerns and this draft addresses many of those concerns,” said Emmett Pepper, policy director for Energy Efficient West Virginia.