WV bypassing ratepayer protection chances in push for fossil fuel-fired data centers

Roughly 60% of the average monthly residential bill increase of $47 since 2019 came from an increase in the costs of procuring fuel for the company’s aging coal-fired power plants, Short told the Senate Energy, Industry and Mining Committee during a presentation on company services Monday.

Short told the committee ratepayer burdens include:

• $6 monthly increase since 2019 for a PSC-approved vegetation management program
• $3 monthly cost to cover EPA compliance measures for utility coal-fired plants
• $2 monthly cost related to acquisition of the coal-fired Mitchell Power Plant

Yet another surcharge goes back to 2012, when Short recalled escalating coal prices prompted a PSC-approved securitization measure that spread out new cost recovery over a 15-year period.

Those surcharges are fueling an energy status quo that has left West Virginia ratepayers on the hook for disproportionately sharp bill increases — paying amid some of the longest power outages in the country.

State ratepayers faced a 90% climb in average residential electricity retail prices from 2005 to 2020, per U.S. Energy Information Administration data. Only Michigan had a greater increase by percentage. Appalachian Power’s West Virginia coverage area ranked in the highest 6% of all 967 listed utilities nationwide in outage minutes per year in 2023, according to a Gazette-Mail review of U.S. Energy Information Administration data.

Legislators ask for cheaper, more reliable energy

Energy, Industry and Mining Committee members among the Legislature’s most vocal supporters of coal sought assurance from Short that Appalachian Power’s coal-fired power can become more affordable and reliable.

Sen. Craig Hart, R-Mingo, who represents one of many poverty-stricken districts in the southern coalfields, told Short nonprofits were telling him they would have to shutter, unable to help the poor due to $1,100 monthly power bills rising even as they use less electricity. Hart told Short portions of his district lose power every week and sometimes more often.

Short replied that Appalachian Power’s coal-fired plants were built in the 1970s and that the company has “gotten more than a useful life out of them.”

“It has the best equipment in there without doing a major modification,” Short said of Appalachian Power’s coal-fired John E. Amos Plant in Putnam County. “I just don’t know how you’re going to squeeze a lot more efficiency out of it.”

West Virginia, which has depended on coal-fired electricity far more than any other state in recent years, had residential and commercial average electricity prices higher than the regional averages in December 2024, according to U.S. Energy Information Administration data. Those prices were higher in West Virginia than in Virginia, where Appalachian Power is held to a renewable energy portfolio standard not in the Mountain State.

Speaking before House members, West Virginia Coal Association president Chris Hamilton turned his attention to what he called “the big white elephant in the room”: data centers.

“Everybody’s competing to provide power for those data centers that we all want to come to West Virginia,” said Hamilton, who has called on state leaders to back coal to meet an expected rise in electricity demand to support the power-hungry facilities that house computing machines and applications.

PJM Interconnection, the regional electric grid operator that covers West Virginia and parts of 12 other states, predicted in October that data centers’ 4% share of electricity demand, or load, will triple to 12% by 2030 and quadruple to 16% by 2039.

But Short warned Senate lawmakers that data center customers wouldn’t change a harsh reality for West Virginia’s coal industry: whether Appalachian Power’s coal plants ramp up their sub-50% rates of running at maximum power will be determined not by landing a new data center but by the price of natural gas.

But with over a third of West Virginia’s 2025 regular legislative session already over, lawmakers are pushing a fossil fuel infrastructure buildout to support data centers that will expose ratepayers to costly fuel market volatility.

‘Rates before infrastructure’

The Senate on Thursday in a 32-2 vote passed legislation that would allow nonrenewable energy to be generated within special business districts created by a 2022 law designed to facilitate microgrid development. Senate Bill 552 would amend law created by 2022’s SB 4001 that established a Department of Economic Development-administered program that permitted exemption from PSC requirements for provision of renewable energy within “high impact” industrial business development districts.

The lone votes against SB 552 came from Phillips and Hart.

SB 4001 cleared the way for Berkshire Hathaway Energy Renewables to supply solar energy to its subsidiary, Precision Castparts Corp., for a titanium aerospace parts manufacturing facility in Ravenswood, Jackson County. Then-West Virginia Economic Development Secretary Mitch Carmichael said the $500 million microgrid and manufacturing development was expected to create at least 200 jobs.

Microgrids are localized electric grids that can operate autonomously.

The Senate approved an amendment from Phillips that would prohibit electric utility customers from bearing costs of non-utility power generation co-located with a “high-impact” business district.

But Appalachian Power spokesperson Karen Wissing told the Gazette-Mail Thursday the utility still has concerns with the bill, noting it further removes an opportunity for the company to serve energy-intensive customers at district sites that could benefit ratepayers.

Short had told lawmakers that expanding high-impact district microgrids to include fossil fuel generation could raise customer bills if independent power producers taking advantage of it need backup service from the utility. Backup service is less demanding for renewable energy than for fossil fuels, Short noted.

Brian Janous, cofounder of Cloverleaf Infrastructure — a developer of clean-powered sites for large electric loads, and former Microsoft vice president of energy — said during a data center power-focused webinar last week data center operators recognize their scale of operations could “break the system” if there aren’t adequate ratepayer protections.

“Rates before infrastructure,” Jeremy Fisher, climate and energy advisor at the Sierra Club’s Environmental Law Program, said during the webinar hosted by Canary Media, an energy transition news nonprofit. “We need to have structures in place to ensure that, yeah, not only are the data centers coming online held accountable for the costs that are going to be incurred into the rest of the system to hold other ratepayers harmless. But we also need to make sure that they have enough skin in the game that they are actually coming in with a commitment that is real.”

In July, Appalachian Power and Wheeling Power proposed revising large capacity power and industrial power service rate schedules to require contracts to last at least 20 years, aiming to protect ratepayers from anticipated new large power additions from the data center industry.

But in a Jan. 22 agreement still pending before the PSC, the companies and other intervening parties — including Google LLC — shortened the proposed minimum contract length to 12 years.

‘The solution can’t be ... a bunch of gas plants’

Janous said data centers provide utilities “huge opportunities” to “make intelligent investments in their system.”

“[But] the solution can’t be, well, now we’re just going to build a bunch of gas plants,” Janous said.

“A bunch of gas plants” is what consumer and environmental advocates fear could result from a PJM plan, the Reliability Resource Initiative, that critics say will prove unnecessarily costly by letting gas-fired projects “jump” a backlogged queue to connect to the region’s electric grid.

There’s growing evidence that a rush to build gas plants isn’t necessary.

Nearly 100 gigawatts of new electric load could be added to the grid while maintaining grid reliability and affordability with modest, brief reductions in use, according to a study published by Duke University’s Nicholas Institute for Energy, Environment and Sustainability last month.

The report identified 18 gigawatts of potential load integration in PJM territory.

Siting gigawatts of new demand with utilities that have spotty track records on transitioning away from fossil fuels risks greater exposure to gas prices for all customers, Fisher said.

Momentum toward gas-fired power

SB 552’s advancement came the same day Gov. Patrick Morrisey announced that two energy companies joined forces in the development of a facility expected to use coal, gas and biomass to power an onsite artificial intelligence campus in Mason County.

Houston-headquartered energy transition company Fidelis New Energy LLC and Akron, Ohio-based energy and environmental technology company Babcock & Wilcox have partnered in development of the latter’s BrightLoop facility at the Mountaineer GigaSystem site.

The West Virginia Economic Development Authority approved a forgivable $62.5 million loan in 2023 for Mountaineer GigaSystem LLC, a Fidelis subsidiary.

Per a memorandum of agreement between Mountaineer GigaSystem and state economic development officials, the project is to include:

• A hydrogen production facility that yields 640 metric tons of hydrogen per day
• A 75-megawatt biomass power plant
• Carbon capture equipment, which is unproven at commercial scale
• A supporting carbon sequestration pipeline and wells

Representatives of coal-fired power producer Longview Power and Hope Gas pitched visions of gas-fired power growth to support data centers in presentations to House Energy and Public Works Committee members last week.

Longview Power president and CEO Steve Nelson told the committee a Longview holding company, Mountain State Clean Energy, is developing a gas-fired power plant in Monongalia County that would benefit from what a company presentation called “needless overregulation” through the state’s existing microgrid statute.

Jeffrey Nehr, a senior vice president at Hope Utilities, noted to the committee his company was behind a 21.5-megawatt gas power plant supporting a Pittsburgh International Airport microgrid.

FirstEnergy Corp. president and CEO Brian Tierney said, in an earnings conference call last week, the utility plans to retire 3,000 megawatts of coal-fired generation between 2035 and 2040. Tierney said company spending of $4 billion to $6 billion over 12 to 15 years could yield 3,000 to 4,000 megawatts of combined-cycle gas generation that replaces the coal-fired power.

Plans among company subsidiaries Mon Power and Potomac Edison are for new generation, not conversion of existing plants, FirstEnergy spokesperson Will Boye said Thursday.

Sean O’Leary, senior researcher at the Ohio River Valley Institute, a pro-renewable energy nonprofit, said FirstEnergy ratepayers will be headed for much more expensive electricity if the company pursues such an energy transition.

O’Leary cited significant spikes in construction costs for new gas-fired plants and expected increases in the price of natural gas, which the EIA has projected would grow 11% in 2026 from the first quarter of 2025.

Ratepayer protections advancing in other states

Legislation has been advancing in other states designed to protect ratepayers from data center costs.

• In Georgia, legislationwould prohibit certain costs incurred by an electric utility through serving commercial data centers from inclusion in utility rates or charges unless they’re designed to recover those costs “at least substantially” from those data centers.
• In Utah, legislationwould require large-load customers to bear “all just and reasonable incremental costs” for their electric service.
• In California, legislation would require a data center to prepay an electrical corporation for necessary infrastructure upgrades in exchange for more expedited construction and mandate all electricity delivered to data centers will come from zero-carbon resources by 2030.

Such legislation would likely be a nonstarter in West Virginia’s coal-content Legislature, which has not taken up bills introduced by Delegate Evan Hansen, D-Monongalia, that would cap electric rates until July 1, 2026, and create a community solar program in which subscribers can buy interest in a solar facility and use credits against their electric utility costs.

‘Let’s burn more coal’

Phillips echoed many energy experts in his exasperation over Short’s presentation.

“You don’t run [coal-fired plants] even close to what they [could be] potentially running,” Phillips said. “So why keep them open?”

Short told the Energy, Industry and Mining Committee Appalachian Power keeps its coal-fired plants open because they provide required capacity to meet peak demand. He acknowledged ratepayers are on the hook for plant costs when they’re not running.

They’re on that hook often as other energy prices keep undercutting coal.

Phillips’ solution is to double down.

“Build another coal-fired power plant,” Phillips said. “Let’s burn more coal.”