Gov. Justice proposes tax break for power station
CHARLESTON — As the special legislative session winds down this week, lawmakers and Gov. Jim Justice are working on a plan to give the Pleasants Power Station a new jolt of energy.
On Monday, the House Finance Committee discussed House Bill 207, which would exempt merchant power plants from the business and operation tax. The committee passed the bill by unanimous voice vote. The bill will be before the full House today at 9 a.m. and is expected to be taken up by the Senate later in the day.
John Judge, CEO of FirstEnergy Solutions (FEC), testified before the committee Monday afternoon. FirstEnergy Solutions, formerly a subsidiary of FirstEnergy headquartered in Ohio, declared bankruptcy in 2018. FEC operates the Pleasants Power Station, located five miles south of St. Marys in Pleasants County.
Judge said the Pleasants Power Station and the Longview Power Station in Monongalia County are the only merchant power stations in West Virginia. These kind of power stations, as defined by the state Department of Environmental Protection, are funded by investors and sell their electricity on the wholesale power market. Pleasants Power does not sell power on the retail market.
Longview, a newer plant than the Pleasants County plant, has a business and operation tax exemption in Monongalia County. Judge said HB 207 was needed to keep Pleasants Power Plant competitive in the marketplace.
“It was set many years ago at a rate and we have to pay that,” Judge said. “We’re the one plant that pays this tax and does not have a way to pass it straight through to customers. It goes straight into our cost structure and has an impact to make our plant more expensive.”
Asked by Steve Westfall, a Republican delegate representing Jackson County, about the economic effect of the power station closing, Judge said it would be significant.
“We do have 160 employees at that plant that work directly for the plant,” Judge said. “When you look at what we spend directly at the plant and the broader economic effects, it’s on the order of $400 million dollars.”
Jay Powell, president of the Pleasants County Commission, agreed with Judge’s assessment. Powell told lawmakers Monday the power plant has been a blessing to the community.
“This is going to help keep the Pleasants County plant open,” Powell said. “If it closed, it would be devastating.”
Justice said the bill, added to the special session call Friday, would put Pleasants Power Station on a “level playing field” with other power plants in the state.
“Officials with the plant came to me this week and told me they needed help to be able to stay open and that they were getting crushed by this tax,” Justice said. “I called our incredible team with our Department of Revenue and together we have found a way, within our means, to move some money around and make it work.”
The station, first constructed in 1979, produces 1,300 megawatts from two 650-megawatt coal-fired units. It burns more than 3.4 million tons of coal per year and employs more than 160 people.
The plant was nearly slated to shut down in January, but the deactivation notice was extended until May 2022. Justice said HB 207 would extend the life of the Pleasants Power Plant beyond that.
“This bill is so incredibly important because we’re talking about saving people’s jobs — good coal jobs — and saving entire counties that would be devastated if this plant were to close for good,” Justice said. “This is an emergency and I’m calling on the House and Senate to work along with me to act on this as quickly as possible. We have a chance to save whole communities and we need to take it.”
During the committee meeting Monday, Judge said HB 207 would help keep Pleasants Power Station going past 2022 as it participates in capacity auctions through electric wholesale marketing company PJM, which serves electrical markets in 13 states. These auctions allow Pleasants Power to promise to have the plant around in three years to provide electricity in exchange for payment.
“The next one of these capacity auctions takes place in August,” Judge said. “We’d like to offer (Pleasants Power Station) into it. If it cleared that auction, then we would be committing to having that plant open for the second half of 2022 and the first half of 2023. If we can get this bill passed and make other changes, we’d be in a position cost structure-wise to not only offer into this next capacity auction but continue to do so as each capacity audition comes up year by year after that.”
If passed, the bill would take effect July 1, 2020, allowing the state to collect business and operation taxes from Pleasants Power Plant until then.
Steven Allen Adams can be reached at email@example.com