The Senate Economic Development Committee heard testimony Tuesday afternoon from county commissioners – including Berkeley County Commission President Eddie Gochenour regarding concerns about HB 2014, the microgrid/data center bill. (Photo by Steven Allen Adams)

CHARLESTON — A West Virginia Senate committee amended Gov. Patrick Morrisey’s bill encouraging development of data centers — some of which could be powered by microgrids — to address concerns raised by county officials.

The Economic Development Committee recommended an amendment to House Bill 2014, the Power Generation and Consumption Act after more than three hours of testimony.

HB 2014, introduced on behalf of Morrisey, would create a Certified Microgrid Program in the Division (currently the Department) of Economic Development to attract high-impact data centers to the state and localized power generation for such facilities, also called microgrids.

Among other provisions, the bill would allow for multiple microgrids across the state if more than 60% of the electricity generated is used by one or more high-impact data centers, defined as one or more facilities with a power load of 90 megawatts total. These microgrids are limited to a sale of 10% of the electricity generated to the wholesale market. The remaining energy must be internally used.

Instead of having data center property values assessed by the county where they would be located, the bill as it came from the House required high-impact data centers and microgrid owners file tax returns with the Board of Public Works by May 1 of each year covering the preceding tax year. This is similar to how the Board of Public Works approves the real and personal property values of public utilities whose properties stretch across multiple counties.

Eddie Gochenour, the president of the Berkeley County Commission, told the Senate Economic Development Committee Tuesday afternoon that property tax provisions within HB 2014, the microgrid/data center bill, would harm counties. (Photo by Steven Allen Adams)

The original bill instructed the state auditor to divide the tangible personal property revenue collected from the high-impact data centers. While counties would still get their share of tangible personal property tax revenue due to the counties for existing general obligation bonds or excess levies, the remaining tax collections would be divided between several state-level funds.

According to the bill, 55% of the tax increment collections would go toward a new fund aimed at further reductions of state personal income tax rates, 10% would go toward the Economic Development Closing and Promotion Fund, 5% would go toward the Economic Enhancement Grant Fund administered by the Water Development Authority and 5% would go toward the Low-Income Energy Assistance Program administered by Department of Human Services.

Another 15% would go toward a new Electric Grid Stabilization and Security Fund. The fund would be used for regulated utilities and grid security including the development, maintenance of utility-owned and operated coal and natural gas electric generation, transmission resources which only serve West Virginia ratepayers, environmental compliance equipment and other related projects.

“Really studying the issue, looking into it and seeing what the almost at times unbelievable amount of investments that go into these projects and the potential tax revenues…it presented a once-in-a-lifetime opportunity to address things on a massive scale with dollars that have never been here before and that no existing government has relied upon,” Curtis Capehart, director of policy for the office of the governor, said on Tuesday during committee testimony.

“That provided an opportunity to really monetize the intersection between this new technology era and the kind of energy resources we have in West Virginia in a way that could structurally change not just the state, but also the way that we deal with things like taxes,” Capehart continued.

During his testimony, State Tax Commissioner Matt Irby compared the property tax structure to a tax increment finance district.

“At some point before either a data center is certified or we have a microgrid, it establishes a baseline for the property and ensures that the property tax revenues that were being produced by the property up to that point continue to remain with the levying bodies, those local levying bodies,” Irby said. “The other thing that it does is it preserves the excess levies.”

County officials, however, were not happy about this change in property tax collections from data centers. Eddie Gochenour, the president of the Berkeley County Commission, was at the Capitol on Tuesday and said his county would lose millions in tax revenue under HB 2014.

“This is a game changer on our finances,” Gochenour said. “There’s a lot of tax dollars that come off of that and currently, as it’s in code, the state is entitled to 1% of the revenue. The rest of that stays in Berkeley County. What they want is to come in and take it all, and that’s not fair, and we’re going to have to fight like the last monkey that gets on the ark.”

Greenbrier County Commissioner Tammy Tincher, president of the County Commissioners Association of West Virginia, virtually testified at Tuesday’s committee meeting. She said the bill would discourage counties from actively recruiting data centers.

“Collaboration between state and county officials can lead to innovative solutions that support sustainable growth and development,” Tincher said. “With the addition of the tax language on what started as a microgrid bill, I’m concerned that this bill, as presented, will ultimately discourage local counties and municipalities from attracting data centers to their community.”

But the Senate Economic Development Committee adopted an amendment to HB 2014 to change the property tax formula for data centers. Under the amendment, 55% would go to the personal income tax reduction fund, 30% would go to the county where the data center is located, 5% would go to the remaining 54 counties based on a per capita basis using the most recent U.S. Census, 5% would go to the state road fund and 5% would go to the Electric Grid Stabilization and Security Fund.

The bill now goes to the full Senate for further consideration. The House will need to concur with any changes made to the bill by the Senate.

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