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Study: West Virginians pay more for electric compared to others in PJM market

CHARLESTON — As the possibility of West Virginia electric customers being on the hook for environmental improvements for three power plants looms on the horizon, a new study shows residential and industrial customers in the state already pay some of the highest prices for power.

According to a study conducted by the West Virginia University Bureau of Business and Economics Research on behalf of the public relations firm Orion Strategies, electricity prices in West Virginia have steadily increased over the last 10 years compared to the average price of electricity for other states part of the PJM Interconnection market.

PJM Interconnection is a wholesale energy transmission company, also called a regional transmission organization, serving 13 states and Washington, D.C. PJM serves all neighboring states and parts of Illinois, Indiana, Michigan, Delaware, New Jersey, and North Carolina. PJM includes 400 member utilities and independent power producers.

Founded in 1927, PJM and other regional transmission organizations allow generators of electricity and users to buy and sell power across the organization’s territory. Today’s PJM market came to be in 1999.

While markets, such as PJM, have the potential to drive down the cost of wholesale electricity for industrial users and retail prices for residential customers, the WVU study said West Virginia was not receiving those benefits. According to one chart, PJM’s electric prices for residential customers remain higher than West Virginias over a 10-year period, but while PJM has come down since 2010, West Virginia’s prices have mostly increased.

“Over the past 10 years, West Virginia’s residential prices have risen, while PJM’s average price has come down considerably,” wrote Eric Bowen, a research assistant professor with WVU’s Bureau of Business and Economic Research.

“As of 2019, the average residential electricity price in the PJM area was 12.1 cents per kilowatt hour, approximately 4 percent above West Virginia’s average of 11.6 cents per kWh,” Bowen said. “West Virginia’s industrial electricity rates also fell during this period, moving from 6.9 cents per kWh in 2010 to 6.2 cents per kWh in 2019, a decline of about 1.2 percent per year on average. However, West Virginia’s industrial rates in 2019 were above those for the PJM market as a whole.”

Rebecca McPhail, president of the West Virginia Manufacturers Association, said in a statement Friday that West Virginia’s electricity prices put it at a disadvantage to other states in the PJM network.

“While the rest of PJM has a competitive marketplace that has driven down costs, West Virginia’s numbers are going the opposite direction,” McPhail said. “West Virginia is a highly regulated market in which a few utilities are producing most of their own electricity and passing along the higher costs to ratepayers.”

According to a 2020 report from the Consumer Advocate Division of the state Public Service Commission, monthly utility costs for customers of Appalachian Power and Wheeling Power increased by 7.4 percent between 2020 and 2021, from $129.05 to $138.58. Wheeling Power customers in Wheeling saw their monthly electric bills increase by 15 percent over a five-year period between 2017 and 2021.

The PSC issued an order last month approving a plan by Appalachian Power and Wheeling Power to make environmental improvements to the Amos Power Plant in Putnam County, the Mountaineer Power Plant in Mason County, and the Mitchell Power Plant in Marshall County to keep the plants operating until at least 2040.

The companies are seeking a 3.3 percent increase for West Virginia ratepayers to help subsidize environmental improvements at the three plants after regulatory agencies in Kentucky and Virginia declined requests to help shoulder the financial burden for the improvements. The cost to state taxpayers for the environmental upgrades for the three plants would increase from $23.5 million to $48 million.

The decision was opposed by a wide range of groups, including the West Virginia chapter of AARP, the West Virginia Energy Users Group made up of large businesses and manufacturing interests, the Sierra Club and Energy Efficient West Virginia.

Steven Allen Adams can be reached at sadams@newsandsentinel.com.

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