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West Virginia Senate amends, passes microgrid and data center bill

Senate concurs with budget bill compromise

Senate Economic Development Committee Chairman Glenn Jeffries, center, and state Sen. Brian Helton look over proposed amendments to HB 2014, the microgrid/data center bill during a break in Friday’s Senate floor session. (Photo courtesy of WV Legislative Photography)

CHARLESTON — The West Virginia Senate worked its way through several amendments Friday before passing Gov. Patrick Morrisey’s bill encouraging the construction of data centers and microgrids, while later making quick work of approving a compromise budget bill.

The Senate passed House Bill 2014, creating the Power Generation and Consumption Act, in a 32-1 vote Friday evening, sending the bill back to the House of Delegates for concurrence.

HB 2014, introduced on behalf of Gov. Patrick Morrisey in March, focuses on attracting high-impact industrial businesses and data centers to West Virginia through the creation of the Certified Industrial Business Expansion Microgrid Development Programs and the High-Impact Data Center Program.

The legislation aims to streamline development, offer regulatory exemptions within designated microgrid districts, establish a special valuation and tax distribution framework for high-impact data centers and create a fund for electric grid stabilization.

“We are in a race when it comes to AI and the high tech technology that we’re experiencing across this country,” said Senate Economic Development Committee Chairman Glenn Jeffries, R-Putnam. “I think that we … are taking a step today to be able to put ourselves in a position that we have companies that are looking at us, that are looking at the state of West Virginia.”

The bill allows for microgrids for data centers if more than 70% of the electricity generated is consumed by or will be consumed by one or more data centers.

Microgrids within these new districts would be exempt from jurisdiction of the state Public Service Commission regarding rates, certificates of convenience, service conditions, complaints and net metering and interconnection standards. Projects would only be able to participate in the microgrid if they had not previously received electrical service from a utility and can show their new investment will not decrease load elsewhere.

The bill protects regulated utility customers from bearing any costs associated with electricity generation, transmission or distribution facilities serving a microgrid district, with those costs borne by the generator or consumers within the district. It prohibits payment in lieu of taxes agreements or tax increment financing projects from being entered into for electricity generation or distribution property dedicated, with 75% or more output, to serving these microgrid districts.

Applicants must present a confidential letter of intent with detailed project information to the secretary of commerce and must make good faith efforts to negotiate electricity supply with the local utility for at least 120 days before submitting the letter.

Counties and municipalities are prohibited from enacting or enforcing ordinances, regulations or rules that would limit the creation, acquisition, construction, equipping, development, expansion and operation of certified microgrid districts or high-impact data center projects.

Certified projects are also not subject to existing county or municipal zoning, horticultural, noise, viewshed, lighting, development, land use ordinances, permitting, inspection, code enforcement, license requirements or general legal jurisdiction. Despite the exemptions, certified projects will still pay business and occupation tax, municipal sales and service tax, ad valorem real and personal property tax, municipal service fees and utility rates to the municipality.

Instead of having data center property values assessed by the county, the bill as it came from the House required owners to file tax returns with the Board of Public Works by May 1 of each year covering the preceding tax year.

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 for existing general obligation bonds or excess levies, the remaining tax collections would be divided between several state-level funds.

The Senate adopted an amendment Friday offered by state Sen. Brian Helton, R-Fayette, changing the property tax formula for data centers. Under the amendment, 50% would go to the personal income tax reduction fund, 40% would go to the county in which 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, 3% would go toward low-income energy assistance and 2% would go into the new Electric Grid Stabilization and Security Fund.

“We are opening up the door for the opportunity for our state to really grow,” Jeffries said. “This bill is a very important bill and I’m very, very thankful that we have taken this step to move in the right direction.”

“I think this bill is more than tax formulas and economic zones. It’s about positioning West Virginia to lead America into the future of energy,” said Sen. Ben Queen, R-Harrison. “Data centers, AI infrastructure and computing power that demands real electricity and real reliability. That’s West Virginia’s moment. And this bill tells the country, if you want to build energy, build here. If you want to power the future, come to West Virginia.”

An adopted amendment to the bill from Senate Energy Industry and Mining Committee Chairman Chris Rose, R-Monongalia, clarifies that no money in the Grid Stabilization Fund or obtained from bonds issued for environmental control, consumer rate relief or utility consumer rate relief may be used by a public utility to close or cease operations at an electric generating plant.

The lone nay vote was state Sen. Rupie Phillips, R-Logan, who has raised concerns since the bill’s introductions that the bill could increase electric rates on customers despite its protections.

“Bottom line, Mamaw can’t afford it,” Phillips said. “I just can’t see any good out of this. I don’t think it’s necessary to have it. If a company wants to come in and build a microgrid and have a data center, they don’t need this legislation. They can come in and do it now. So, I don’t know why we need this.”

The Senate also concurred Friday afternoon with the House amendment to House Bill 2026, the budget bill, in a 31-1 vote. It now heads to the governor’s desk.

On Thursday night, the House amended and approved HB 2026 in a 78-18 vote. The compromise sets the general revenue budget for the fiscal year starting July 1 at $5.318 billion, slightly lower than the amounts presented by Morrisey and approved in the Senate’s version. The compromise budget was 4% more than the $5.113 billion passed by the House last week.

The compromise bill leaves $5 million unappropriated for the next fiscal year. The compromise general revenue budget also includes a section for one-time items to be paid out in order based on available surplus tax collections left over at the end of the current fiscal year. The four items total more than $210 million.

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

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