In West Virginia, and Everywhere, Coal Drives Up Power Bills

August 31, 2022

Wall Street Journal:

Coal used to keep utility rates low in West Virginia. More recently, it has caused them to rise faster than in most other states.

Jason Zeigler said his monthly electricity bill for his 2,000-square-foot, four-bedroom house on a hilly street just outside this city on the Ohio River hit $368.91 this spring. Like his neighbors, Mr. Zeigler said he has spent thousands of dollars to buy more efficient appliances, adding insulation to his attic and switching to lightbulbs that use less energy. His bills are still rising in a state that generates 91% of its electricity from coal, more than any other state.

“I’m not one of these coal or nothing people. You’ve got to diversify your energy,” said Mr. Zeigler, a physical-therapist assistant. He and his wife have spent less on clothes, restaurants and vacations as their bills climbed, he said.

Utility rates have been rising for years in West Virginia, where coal has long played an outsize role in the economy. Keeping mines open has been a priority, even as jobs in the industry have dwindled and coal-fired power plants elsewhere have closed.

While electricity rates have risen nationally due to higher costs for fuel and environmental upgrades, among other things, rates have risen faster in West Virginia than most other states, as the state has clung to coal generation.

A governor-appointed commission that sets utility rates is pushing to keep coal plants open longer while ensuring they burn more coal. Critics said the moves aren’t helping the coal industry and put a high burden on ratepayers in a state with the second-lowest median household income behind Mississippi, according to Census Bureau data.

Last fall, the West Virginia Public Service Commission approved $383.5 million in environmental upgrades to keep three aging coal-fired power plants in West Virginia operated by American Electric Power Co. from shutting down in 2028. The plants also provide electricity to Kentucky and Virginia, but regulators in those states balked at the expense. That means West Virginia customers will pay the full cost of the upgrades, $448.3 million, effectively subsidizing electricity in the neighboring states.

The commission also ordered the three AEP coal plants to operate at historical levels, which could keep them from buying electricity more cheaply on the regional market, in some cases from solar or other renewable sources.

The commission is considering whether to approve a request by AEP to increase rates by $297 million, partly because of higher costs for coal this year. Average electricity bills for AEP customers could go up by $18.41 a month, according to the company. A hearing on the matter is scheduled for October.

Chris Hamilton, president of the West Virginia Coal Association, has said longer-term coal contracts would help utilities avoid higher coal prices, partly by supporting more coal mining in the state. Supporters of renewable-energy projects in West Virginia have said the public-service commission is attempting to prop up a dwindling coal industry.

The number of coal miners in the state has fallen below 12,000 in recent years, down from about 55,000 in 1980, according to the state coal association. “There’s a rear-guard action by the coal industry, as the door is closing, to salvage as much as they can,” said Evan Hansen, a member of the state House of Delegates in Monongalia County.

Coal prices have surged this year as power demand has rebounded from the Covid-19 pandemic and Russia’s war in Ukraine prompted electricity producers in Europe to stock up before a ban on coal exports from Russia. In Central Appalachia, they have more than doubled from last year.

Wall Street Journal:

Natural gas isn’t the only power-plant fuel on fire this year. Thermal-coal prices have soared from Appalachia to Australia, threatening more increases in manufacturing costs and power bills this summer.

Futures for coal delivered to northwestern Europe have risen 137% so far this year, to $323.50 a metric ton as of Wednesday. The benchmark price in the Pacific region, set at an Australian export facility, is up more than 140% this year. Cash prices in central Appalachia have climbed 40% in 2022—and more than doubled over the past year—to $129.65 a short ton last week, the highest price on record.

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2 Responses to “In West Virginia, and Everywhere, Coal Drives Up Power Bills”

  1. rhymeswithgoalie Says:

    Last fall, the West Virginia Public Service Commission approved $383.5 million in environmental upgrades to keep three aging coal-fired power plants in West Virginia operated by American Electric Power Co. from shutting down in 2028.

    The regulations that govern public utilities have a special exemption for spending on capital projects, which creates a bias toward starting new capital projects (paying for expensive coal plant upgrades) as opposed to monitoring, maintenance and other programs.

  2. gmrmt Says:

    Death spiral here we come.


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