WV House passes amended version of Morrisey's microgrid, data center bill sans requirements for coal
The West Virginia House approved a priority bill pushed by Gov. Patrick Morrisey on Tuesday that is meant to incentivize the creation of microgrids and data centers in the state.
Members of the House voted 88-12 in support of House Bill 2014. Republican Dels. Marty Gearheart, R-Mercer; Bill Flanigan, R-Ohio and Jordan Bridges, R-Logan, joined the chamber's nine Democrats in voting against it. The bill now heads to the Senate for introduction and consideration.
The bill's passage in the House came one day before a deadline that requires all bills to be passed out of their chamber of origin in order for them to be considered by the other chamber and sent to the governor's desk by the final night of session on April 12.
HB 2014 — dubbed as the Power Generation and Consumption Act — will allow companies seeking to build data centers to create their own, independent energy grids to power them.
Data centers are large facilities that house vast computer systems used for cloud storage, artificial intelligence computing and telecommunications; the centers require massive amounts of energy and electricity to run.
Through using their own microgrids, proponents for the policy say data centers would be able to operate in West Virginia without overburdening the state's power and utility infrastructure or raising electricity rates for existing residential and commercial customers.
Under the proposed bill, the state's certified microgrid program would operate under the newly reorganized Division of Economic Development. Through approval from the division, data companies looking to operate in West Virginia would do so in 'high impact industrial business development microgrid districts.'
There, instead of being required to connect to the existing utilities in the region, they would create their own, smaller energy grids with the primary purpose of powering the data centers. Per the bill, 10% of electricity generated by the microgrids but not used by the data centers or industrial facilities would be allowed to be sold on the wholesale market to others nearby, potentially at lower rates than existing utilities currently offer.
The initial version of HB 2014 — the one specifically requested by Morrisey — included provisions that would have required electric utilities with coal fired plants to operate at 69% capacity and hold a 45-day supply of coal on hand at all times. Most coal fired power plants in the state operate at an average 40% capacity and stockpile a 30-day supply of coal.
Those provisions were meant to support the state's coal industry, but power companies — including Appalachian Power, the state's largest electric utility — said it would be difficult to meet those standards and doing so would have raised rates for existing electric customers in the state.
Through a committee substitute for HB 2014 passed by the House Energy and Public Works Committee last week, the coal-backed provisions were removed from the bill and not included in the version passed by the House on Tuesday.
In response to concerns raised by House members on the floor Tuesday regarding the potential for the bill to increase utility rates for residential customers, Del. Clay Riley, R-Harrison, said he actually believes HB 2014 could lead to savings for residents, though indirectly, through tax revenue generated locally and a fund that will be created by the legislation.
I do not believe [HB 2014] is going to increase [customer electric rates],' said Riley, a longtime proponent for data centers in the state and a sponsor of the bill. 'I think it puts more money back in the pockets of citizens of West Virginia, both in terms of ratepaying and in terms of personal income taxes and some of the other things that I think I've seen in there.'
Riley said he estimates that roughly $160 million to $200 million will be generated in tax revenue annually for a county that houses a data center and microgrid.
Following the payment of property taxes to the appropriate local agencies, other revenue from the data centers and related microgrids will be split between several statewide initiatives, including to: the Personal Income Tax Reduction Fund to offset personal income tax cuts, the Economic Development Closing and Promotion Fund to help recruit more businesses to the state, the Water Development Authority's Economic Enhancement Grant Fund for water and sewage projects, the Department of Human Services' Low Income Energy Assistance Program to help low-income families cover utility bills, the state general revenue fund and the newly created Electronic Grid Stabilization and Security Fund.
The Electronic Grid Stabilization and Security Fund, Riley said, could help utility companies cover the cost of maintenance and repairs in their infrastructure that would otherwise be — and often are — baked into customer rate increases. In other words, while that won't directly decrease power costs for residents, it could offset future expenses they would incur.
Del. Henry Dillon, R-Wayne, said in addition to limiting future increases for ratepayers, the data centers and microgrids could mean a population and employment bump for the regions they're located in. Jobs will be created while the facilities are being constructed, he said, and after that it's likely that at least some jobs will stay in the areas.
That could help decrease another major factor that often leads to utility rate increases: population loss.
Dillon said, at first, he shared similar concerns to others worried that this initiative could lead to lackluster results and heavy costs for existing residents.
'But throughout the process of working on this bill … I believe that the governor is going in the right direction here,' Dillon said. 'This is an attempt to innovate. This is an attempt to take a new approach to energy policy in the state, and it's not going to harm our utility companies. It's not going to harm ratepayers, it's not going to harm oil and gas. It's not going to harm coal. I believe that this is a net positive for the state.'
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