West Virginia lawmakers are pushing legislation under which electric power bills could increase and local control could decrease because of a force about 7,000 miles away.
A bill requested by Gov. Patrick Morrisey advancing through the House of Delegates mentions China nine times.
“The People’s Republic of China is positioning itself to be the global leader of data centers and is investing in technology to encourage the flow of data toward China instead of toward the United States,†declares before laying out provisions that would strip local governments and regulators of jurisdiction over data centers sought by the legislation while propping up increasingly costly coal-fired electricity.
HB 2014 would eliminate a requirement that electrical service to business development districts be generated from renewable sources and remove a limit on such districts from a 2022 law designed to facilitate development of microgrids — localized power grids that can operate independently.
HB 2014’s backers say West Virginia can’t waste time in stepping up recruitment of data centers — computer server-populated warehouses that power artificial intelligence expected to dramatically increase energy demand in coming years. The urgency — Morrisey and other supporters argue — comes from competing with China, where the government and private investors drove a recent data center boom.
“It’s a three-to-five-year race,†Delegate Clay Riley, R-Harrison, said at a House Energy and Public Works Committee meeting at which the committee approved HB 2014. “… Whoever wins the AI race puts themselves ahead.â€
But HB 2014, advanced to the full House by the committee Wednesday, would move West Virginia farther away from renewable energy progress overwhelmingly dominated by China in recent years while risking raising electric rates through its promotion of coal-fired power.
Meanwhile, some technology that West Virginia leaders tout in their visions of a data center-dotted future for the state is years away from deployment as countries vie for better position in a global transition toward cleaner energy and greater grid reliability.
Risk of hiked electric rates
HB 2014 would remove a limit on state-certified microgrid districts not subject to Public Service Commission jurisdiction, allowing such status to any district in which more than 60% of electricity generated is consumed by one or more “high impact†data centers. The state previously had a limit of two “high impact†districts.
The Energy and Public Works Committee rejected an amendment proposed by Environment, Infrastructure and Technology Subcommittee Chair Daniel Linville, R-Cabell, that would have increased the 60% threshold to 75%. Had it been approved, the move would have made microgrid districts consume more electricity internally, making them harder to build.
Linville contended his amendment would make dealing with data center developer bankruptcy and a subsequently increased rate burden for electric customers less likely, alluding to testimony from an Appalachian Power representative that ratepayers would be the only party left to guarantee the company a return on its investment to support the data center if its developer goes bankrupt.
But Riley argued against the amendment, saying “the governor got it right†in requesting the bill as it was, pointing to West Virginia’s dearth of data centers compared with surrounding states. Northern Virginia has emerged as the world’s largest data center market, with several hundred data centers in Fairfax, Prince William and Loudoun counties — the latter of which borders West Virginia.
“Why would we make this thing harder to build?†Riley asked.
Speaking before the Energy and Public Works Committee, Appalachian Power Regulatory and Finance Vice President John Scalzo testified HB 2014 wouldn’t ensure against increased rates as intended.
Appalachian Power has said opening up business districts to nonrenewable energy could raise customer bills if independent power producers taking advantage of it need backup service from the utility since nonrenewable backup needs dwarf those of renewables.
“If [a] customer or group of customers inside of that microgrid went belly up, utilized the bankruptcy protection afforded by the federal government, that the costs associated therewith, regardless of what this bill presently says, could be passed on to the ratepayer?†Linville asked Scalzo.
“Could, yes,†Scalzo replied.
Concern about local control
HB 2014 would prohibit counties and municipalities from enforcing or adopting ordinances, rules or regulations that limit creation, development or operation of any certified microgrid district or high-impact data center project.
“I understand that there’s a race, and the policy decision was made in crafting this bill that we want to win that race and we don’t want anything getting in the way we want to move as fast as possible, and a local ordinance or local zoning may delay things. So I get it,†Delegate Evan Hansen, D-Monongalia, said. “But I’m not in agreement that that’s the best policy.â€
Hansen alluded to a Fairfax County, Virginia, data center zoning ordinance approved last year that tightened regulations and addressed concerns about noise, building design and proximity to residential areas.
The zoning ordinance required all equipment must be enclosed or screened by a wall or similar barrier to reduce visual and noise impacts in districts where data centers are allowed, limits on the size of certain data centers and a 200-foot minimum setback for data center buildings from the lot line of an adjacent residential property. It also required pre- and postconstruction noise studies.
There’s no limit on the kind of power generation to be allowed within the microgrid districts HB 2014 would permit. So nuclear, coal or gas-fired generation could be set up in counties and municipalities denied the power to check such projects through zoning.
China’s renewable energy progress deemed ‘extraordinary’
As West Virginia tightens its embrace of coal, HB 2014’s named nemesis of China has been leading the world in buildout of renewable energy, whose technology has proven simpler, cheaper and easier to install.
China commissioned as much solar energy in 2023 as the entire world did in 2022, according to the International Energy Agency.
The IEA noted upon publishing a global renewables analysis last year that while increases in renewable capacity in the U.S., Europe and Brazil hit all-time highs in 2023, “China’s acceleration was extraordinary.â€
An $890 billion investment from China in clean energy sectors in 2023 was almost as large as total global investments in fossil fuel supply that year, constituting the largest driver of Chinese economic growth, according to Carbon Brief, a global climate news and analysis website.
HB 2014 geared toward fossil fuel development
But HB 2014 would invest in fossil fuels.
The legislation would establish a Department of Commerce-administered grid stabilization and security fund to help regulated utilities develop and maintain coal and gas power generation transmission. The fund could consist of data center property tax payments or other Legislature-approved appropriations.
The Department of Commerce would be barred from using the fund to decommission or replace existing facilities.
“It’s geared toward baseload generation that can always be run, not intermittent sources like wind or solar,†Energy and Public Works Committee counsel Robert Akers said.
HB 2014 would require generating public utilities to maintain an average annual minimum of 30-day coal supply onsite at each coal-fired plant under contract for the remainder of the life of the plants.
The bill also would require utilities to maintain their generating units to be able to self-generate power and achieve at least a 69% capacity factor — a measure of how often a plant runs at full capacity.
Although a 69% capacity factor wouldn’t be required if doing so would increase electric charges above an established rate, energy experts and ratepayer advocates have said a 69% capacity factor target set by the PSC for West Virginia’s coal-fired plants in recent years has encouraged uneconomic use of the plants that cost utility customers.
“It might require [utilities] to replace certain pieces of equipment or keep certain amount of staff on hand,†Akers said of HB 2014. “They might have to have certain things available, a certain amount of fuel supply in order to achieve the 69%. They may have to spend a little bit of extra money along the way.â€
Akers acknowledged the 69% capacity factor provision also would apply to wind and solar since the bill’s language is ambiguous on power sources, a requirement wind and solar wouldn’t be expected to meet.
APCo, WPCo electric costs rose 207% amid coal use
Coal has put ratepayers on the hook for rising energy costs as well as maintenance and environmental upgrades of aging coal plant infrastructure while renewable energy outmatches coal economically.
West Virginia has had the nation’s highest percentage of electricity powered by coal in recent years.
State ratepayers faced a 90% climb in average residential electricity retail price from 2005 to 2020, per U.S. Energy Information Administration data. Only Michigan had a greater increase by percentage.
The average monthly residential utility cost for Appalachian Power and Wheeling Power for 1,000 kilowatt-hours rose from $55.28 in 2005 to $169.69 in 2024, according to PSC data — a 207% increase.
West Virginia had the nation’s third-highest total household electricity costs as a percentage of income in a 2022 nationwide review of electric utility performance by the Citizens Utility Board of Illinois, a consumer advocate group based on federal data largely from 2020.
Energy Innovation LLC, a San Francisco climate policy firm, last year finding the PSC’s 69% capacity factor target was uneconomical, ignoring more affordable market options for utilities and their ratepayers.
Nuclear industry rep: ‘We don’t move that fast’
Data center proponents have hailed nuclear energy as a potential force in a data center-populated future for West Virginia.
U.S. Senate Environment and Public Works Committee Chair Shelley Moore Capito, R-W.Va., noted to reporters Thursday the possibility of co-locating small modular nuclear reactors with data centers.
Also on Thursday, the West Virginia House of Delegates passed a bill in that, if it becomes law, would invite nuclear development in the state by requiring the PSC to develop rules to govern the issuance of permits for construction, use and retirement of advanced nuclear reactors.
“I don’t know if nuclear is green, but I do know this: It is red, white and blue,†HB 2205 lead sponsor Delegate Brandon Steele, R-Raleigh, said in a House floor speech Thursday.
But Rita Baranwal, senior vice president of AP300 small modular reactors at Westinghouse Electric Company, told the Energy and Public Works Committee last week deployment to support data centers takes a long time.
“We were having a meeting earlier about data centers and the ask, ‘Well, can you get me one so I can connect it to the grid ASAP?’ You should have come and seen us 10 years ago,†Baranwal said. “We don’t move that fast. This is not an iPhone. It’s not a widget that we have readily available for you to buy on your favorite website.â€
Baranwal indicated licensing for a small modular reactor design would take two years to complete, with the first project starting around 2030 or 2031 — beyond the time frame for a data center buildout cited by some state leaders pushing for one.
Riley, though, argued to the Energy and Public Works panel that HB 2014 would protect ratepayers and give the state a near-term economic development boost.
“We need to differentiate ourselves,†Riley said.
Mike Tony covers energy and the environment. He can be reached at mtony@hdmediallc.com or 304-348-1236. Follow on X.
