New battle lines are being drawn in the state Legislature with renewables poised to seize a larger share of a West Virginia energy market where coal and natural gas remain king.
Backed by industry groups, Republicans gained their first supermajority in both chambers with election wins earlier this month. If they keep rank next session, Republicans can advance or halt any bill without the need to win Democrats to their side. That dynamic will take center stage against a familiar backdrop.
“It’s the same challenge of how to find common ground ... and how to not get locked into what I believe is a false dichotomy of ‘you protect the environment or you protect jobs,’” West Virginia Rivers Coalition Executive Director Angie Rosser said.
State coal and natural gas industry group leaders acknowledge the rise of renewables but point out their industries are enduringly pivotal forces in the Mountain State economy.
West Virginia was America’s second-largest coal producer last year and ranked sixth nationally in natural gas production, according to the U.S. Energy Information Administration.
“[F]ossil fuels give us the benefit of society, of our health, our way of life,” said Charlie Burd, executive director of the West Virginia Independent Oil & Gas Association. “Without fossil fuels, we have to be honest and say we’d be freezing to death in the dark.”
Legislative priorities among environmental and fossil fuel industry groups reflect some acceptance of a diversifying state energy portfolio. But changing market and political forces could bring to the surface underlying tensions over regulations and resource transitions.
Coal
Preserving the amount of coal consumed here and better positioning companies to compete globally will be among the priorities of the West Virginia Coal Association when the session starts in February, said Chris Hamilton, senior vice president of the group and chairman of the West Virginia Business & Industry Council.
More than a third of the 93 million tons of coal mined last year in West Virginia was exported to foreign markets. The Legislature in 2019 approved a three-year severance tax reduction on steam or thermal coal from 5% to 3%, which Hamilton said helped that segment of the industry “be a little more competitive” and increase production.
Still, the industry is facing headwinds. The state will finish this year with its lowest coal output in roughly a century largely because of the coronavirus pandemic, Hamilton said.
Old models nonetheless prevail. Coal-fired electric power plants accounted for 91% of West Virginia’s electricity net generation last year compared to a nationwide rate of 23%.
After gaining control of the Legislature in 2015, Republicans drove the repeal of a law requiring power companies to eventually produce a fourth of their electricity from alternative fuels.
Reversing course on that and setting an energy efficiency standard are on the wish list of James Van Nostrand, director of the Center for Energy and Sustainable Development at West Virginia University. He cited an American Council for an Energy-Efficient Economy scorecard that ranked West Virginia 48th in the nation in energy efficiency.
FirstEnergy, the major electric utility, does not offer energy efficiency programs in West Virginia. William Singer, a spokesman for the utility, attributed that to the state not requiring incentive programs like those offered by FirstEnergy in other states where customers foot the bill as part of state commission-approved and mandated programs.
“Those are two things that the Legislature could do, an energy efficiency resource standard that says we direct the utility to scale up energy efficiency to achieve certain levels of savings and a renewable portfolio standard that says we direct utilities to procure a certain percentage of electricity supplies from renewable sources,” Van Nostrand said.
An efficiency bill could follow a resolution the Legislature approved earlier this year to study utility costs in hundreds of state buildings, said Delegate Evan Hansen, D-Monongalia.
“[M]y expectation is that should be a bipartisan effort, because who doesn’t want to create jobs and save money?” Hansen said.
Coal producers have other worries following Democrat Joe Biden’s election as president.
“If there are anti-coal initiatives that come up out of the White House, we hope to partner with state-elected officials to push back or collectively oppose initiatives or energy proposals that would likely hurt our West Virginia industries,” Hamilton said.
Natural gas
Greater use of natural gas for power generation could benefit West Virginia environmentally and allow it to compete with neighboring Ohio and Pennsylvania, where natural gas-fired power plants are on the rise, Burd said.
“There’s no reason why West Virginia shouldn’t be doing that too except our regulations are a bit different, and there seems to be a hesitancy to promote [that] and that needs to change a bit, I think,” Burd said. “We’re not competing against coal jobs, we’re competing against Ohio and Pennsylvania for this infrastructure and development. That’s the approach that’s going to have to be taken, and I think our regulators at the state, our senators and delegates … are certainly in the know on that.”
Burd cites a long list of bills last session that benefited oil and gas.
House Bill 4019 established investment tax credits for facilities built to use natural gas and create jobs, and companion House Bill 4421 created tax credits to encourage storage and transportation of natural gas liquids.
“That’s sort of setting the stage to have incentives in place to store and transport liquids for a future cracker plant or a petrochemical plant that would use liquids,” Burd said.
House Bill 4091 expedited horizontal well permits for a fee split between operating permit and reclamation funds in the state Department of Environmental Protection’s Office of Oil and Gas.
But Rosser and West Virginia Surface Owners’ Rights Organization attorney and cofounder Dave McMahon are concerned about the state Oil and Gas Office’s ability to oversee the industry.
Because the number of horizontal well applications has plummeted this year to 147 through October from an annual average of 463 in three previous years, the Oil and Gas Office’s budget, funded mainly through permit fees, has been slashed, office Chief James Martin told the Environmental Protection Advisory Council in June. That will force job cuts to 25 from a staff of 40, including inspectors, permit writers and other personnel.
“You can have strong laws in place, but if there’s no mechanism to practically enforce them, then they’re meaningless,” Rosser said.
Restoring those lost jobs is his group’s top legislative priority, McMahon said. The group also is calling for an annual $100 fee on every well not yet plugged.
Rosser is preparing to oppose anticipated legislation altering the definition of an above-ground storage tank to exclude liquid traps, atmospheric and pressure vessels or associated gathering lines related to oil or gas production and gathering operations. A previous bill to do that stalled.
A state regulatory program for above-ground tanks required spill prevention and response plans after a leak of 10,000 gallons of industrial coal processing liquid into the Elk River, contaminating the water supply for 300,000 people across nine counties.
Solar
Solar lies at the opposite end of the economic spectrum topped by coal in West Virginia. The state ranks 49th nationwide in solar megawatts installed, according to the Solar Energy Industries Association.
A bill to approve solar power purchase agreements, allowing for, among other things, possible tax credits and fixed rates, could help, building on laws passed earlier this year creating a solar utility program approving renewable electric generating facilities up to 50 megawatts and favorably adjusting the business and occupation tax for solar energy.
Purchase power agreements “would increase the demand for rooftop solar across the state, which would lead to jobs because it would help West Virginia’s solar installers to get even more work,” Hansen said.
More solar development will happen regardless of whether lawmakers prioritize it, said Autumn Long, state director for West Virginia’s Solar Neighbors United program.
“[T]hat’s the market at work,” Long said. “However, if we want to encourage investment in this industry and encourage more corporations that have their own renewable goals to come to West Virginia … then there is a need for lawmakers to act.”
