Gov. Patrick Morrisey’s head has been on the cloud.
But when it comes to attracting data centers, local government leaders say he’s leading West Virginia in starting off on the wrong foot.
Their concerns didn’t stop a Morrisey-backed bill to entice data centers — server-populated warehouses that power artificial intelligence and cloud computing — from clearing a key hurdle toward becoming law Tuesday.
After three-plus hours of testimony from county and state officials and debate among its members, the West Virginia Senate Economic Development Committee advanced House Bill 2014, legislation requested by Morrisey that would wipe away local jurisdiction to fast-track data center development and keep some property tax revenue from counties.
The Economic Development Committee amended a formula for distributing property tax revenue that data centers to be governed by HB 2014 would generate but kept the sweeping, 30-page bill’s framework intact.
“This is one of the most overreaching pieces of legislation I’ve ever seen,†Berkeley County Commissioner Eddie Gochenour testified before the committee.
HB 2014 would eliminate a requirement that electrical service to business development districts be generated from renewable sources and would remove a limit on such districts from a 2022 law designed to facilitate development of microgrids — localized power grids that can operate independently.
2022’s Senate Bill 4001 established a Department of Economic Development-administered program that permitted exemption from Public Service Commission requirements for provision of renewable energy within “high impact†industrial business development districts.
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.
HB 2014 previously would have distributed property tax revenue from high-impact data centers as follows:
55% in a fund for reducing personal income tax
15% in an Electric Grid Stabilization and Security Fund HB 2014 would create to help maintain utility-owned coal and gas electric generation
10% in a Department of Economic Development-administered fund for recruiting, promoting and expanding businesses
10% in state general revenue
5% in the Water Development Authority-administered Economic Enhancement Grant Fund
5% in the Department of Human Services-administered Low Income Energy Assistance Program
The Economic Development Committee changed that distribution formula by axing the Electric Grid Stabilization and Security Fund, DED-administered fund, general revenue and LIEAP allotments, replacing them with:
30% to the county in which a data center is located
5% to all counties on a per capita basis
5% in the state road fund
The move followed testimonies signaling fervent opposition to the bill’s property tax distribution scheme from local government representatives.
“Do you feel like the goalposts are getting moved on you?†Senate Finance Committee Chair Jason Barrett, R-Berkeley, asked Gochenour.
“They’ve been taken down,†Gochenour replied.
Putnam County Development Authority executive director Morganne Tenney and Tammy Tincher, Greenbrier County commissioner and County Commissioners Association of West Virginia president, testified that HB 2014 as presented to the committee would disincentivize data center development for counties.
“These commercial property tax revenues are a key tool used by county commissions to balance the budget and pay for our emergency services, such as ambulances, police and first responders,†Jefferson County Commission president Pasha Majdi said, pointing to data center tax revenues in neighboring Loudoun County, Virginia as an aspiration for West Virginia.
Northern Virginia has emerged as the world’s largest data center market, with several hundred data centers dotting Loudoun, Fairfax and Prince William counties.
Tenney said Putnam County officials would like a data center there but didn’t need HB 2014 for that to happen.
State leaders push HB 2014
The West Virginia Center on Budget and Policy, a progressive policy research group, estimated that under the version of HB 2014 advanced Tuesday, a $1 billion investment for a data center in Tucker County would result in $2.1 million lost by the county and $3.2 million lost by the school district for a total of $5.4 million in lost property tax revenue, even after 30% of tax revenue is distributed to local governments.
The study alluded to a planned data center proposed for the county by Purcellville, Virginia-based Fundamental Data LLC.
State officials, though, were supportive of HB 2014 even before the committee’s formula change.
Department of Commerce Deputy Secretary Nick Preservati and Public Service Commission Chairman Charlotte Lane praised the bill in committee testimony.
Preservati asserted HB 2014 was an opportunity to bring at least tens of billions of dollars of investment into West Virginia and contended the bill includes “tremendous protections†to protect ratepayers.
Morrisey has frequently taken to social media to exhort the Legislature to pass HB 2014.
“Pass #HB 2014 in the Senate and put the people ahead of the big spenders!†Morrisey’s campaign and personal X account posted Monday, touting the bill’s personal income tax reduction measure. “We finally have a chance to move the needle economically in our state — don’t ruin our chance for success!â€
Higher bills expected for ‘mamaw and papaw’
But ratepayer advocates have said HB 2014 risks raising power bills, pointing to it requiring 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.
Testifying before the House Energy and Public Works Committee this month, Appalachian Power regulatory and finance vice president John Scalzo said 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.
Scalzo indicated the importance of economic coal use, including buying power from regional grid operator PJM Interconnection when self-generated power is too expensive, during further testimony before the Senate Economic Development Committee Tuesday.
“If you’re not allowed to take advantage of fluctuations in the market and buy it cheaper than you can make it, and we deprive you of that as a legislature, you’re going to charge mamaw and papaw and whoever else more money, right?†Minority Leader Mike Woelfel, D-Cabell, asked Scalzo.
“Yes,†Scalzo replied.
What’s next
HB 2014 now goes before the full Senate for consideration and will require House of Delegates concurrence if the Senate does pass it. The House passed HB 2014 in an 88-12 vote on April 1.
Mike Tony covers energy and the environment. He can be reached at mtony@hdmediallc.com or 304-348-1236. Follow @Mike__Tony on X.
