And FirstEnergy Shows Its Hand on HB2201

Today, The State Journal published energy reporter Sarah Tincher’s story on the differing views of HB2201.

In her story, she quoted FirstEnergy PR guy, and our old friend, as follows:

“FirstEnergy is concerned about the way we credit customer generators because we credit them back at a rate that is equal to the retail cost they pay for electricity,” said Todd Meyers, a spokesman for FirstEnergy’s West Virginia subsidiaries, Mon Power and Potomac Edison.

“Those smaller generators get the benefit of using our electrical infrastructure to sell back the electricity they generate without paying to use that infrastructure,” Meyers said. “In principle, we don’t believe it is fair for the rest of our Mon Power and Potomac Edison customers in West Virginia to subsidize small generators.”

So, now FirstEnergy’s PR guy is directly contradicting FirstEnergy’s chief lobbyist Sammy Gray’s statements to the WV House Energy Committee and the WV Senate Judiciary Committee that FirstEnergy interpreted the “cross-subsidization” language in HB2201 as applying only to direct costs of connecting individual net metered customers to a power company.

Has FirstEnergy changed their minds?  Or was Sammy hiding something from WV legislators?

Ms. Tincher does a great job of blowing Toddy’s argument out of the water, by pointing to studies done by PSCs in Missouri and Mississippi:

Among such reports is a Missouri Energy Initiative study, released in winter 2015, which evaluated the benefits and costs of net metering in Missouri, which has a similar fuel mix and retail electricity pricing to West Virginia.

The study quantified the benefits of load reduction and reduced greenhouse gas emissions, in addition to the costs associated with cross-subsidization among consumer groups, and increased administrative costs in managing a new customer class between 2008 and 2012. According to the report, the net effect was positive for the state each year.

The MEI study also suggested benefits of a decentralized energy system, reduced energy prices, local economic boost from manufacturing and installation of net metering systems.

Another study, conducted by Synapse Energy Economics Inc. for the Public Service Commission of Mississippi in September 2014, modeled the costs and benefits of net metering to the state of Mississippi, which doesn’t currently employ a net metering program. The agency’s Total Resource Cost assessment, which included costs of solar panel installation and administrative costs, as well as benefits of avoided costs to the utility, suggested net metered solar rooftop would result in $27 per MWh of net benefits to the state of Mississippi.

FirstEnergy and AEP had better watch out.  If similar studies are done for the WV PSC, they may have to end up paying net metered customers more for their electricity, not less, to pay us for the benefits we give to all customers.  By the way, that is called a feed-in tariff.

WV PSC Files IRP Order

The WV PSC filed an order laying out very modest guidelines pursuant to the toothless, voluntary Integrated Resource Planning law that AEP and FirstEnergy slipped through the WV Legislature back in 2014.

The WV IRP law, and the PSC’s minimal approach, is a far cry from the kind of law supported by WVU Law School professor James Van Nostrand and Energy Efficient WV in the 2012 and 2013 legislative sessions.


AEP Shows Its Hand on HB2201

The Charleston Daily Mail ran an op ed by AEP’s Jim Fawcett today that revealed for the first time AEP’s interpretation of the just passed HB2201:

The bill defines cross- subsidization as “the practice of charging costs directly incurred by the electric utility in accommodating a net metering system to electric retail customers who are not customer generators.”

In other words, whatever it costs to serve a net metering customer should be borne by the net metering customer, not other customers.

Net metering was first created to encourage the budding solar industry by requiring electric utilities to purchase at the full retail rate any excess energy generated by a customer.

That full retail rate includes the costs of the poles, wires, meters and other infrastructure that keep the electric grid running.

By allowing solar providers to avoid the cost of a service that they benefit from and by paying an inflated cost for the power provided by these solar providers, all customers — even low income customers least able to afford solar panels on their own homes — have to help pay for those who have solar generation installed.

So AEP has just revealed that they believe 2201 throws into question the fundamental one-to-one kwh credit system (which Mr. Fawcett refers to as “inflated costs”) that exists now in WV.  Keep in mind that the actual language in 2201 which defines “cross-subsidization” is not as clear as Mr. Fawcett claims.  The total costs that Mr. Fawcett refers to are indirect costs generally included in AEP’s base rate calculation.

Here’s what 2201 actually says:

 (c) “Cross-subsidization”, for purposes of this section, means the practice of charging costs directly incurred by the electric utility in accommodating a net metering system to electric retail customers who are not customer generators. [emphasis mine]

(d) The Public Service Commission shall adopt a rule requiring that all electric utilities provide a rebate or discount at fair value, to be determined by the Public Service Commission, to customer-generators for any electricity generation that is delivered to the utility under a net metering arrangement. The commission shall assure that any net metering tariff does not create a cross-subsidization between customers within one class of service.

HB2201 does not say all costs, direct and indirect, connected with serving all net metered customers.  It says “costs directly incurred by the electric utility in accommodating a net metering system.”  Costs that cannot create “cross-subsidization” must be “directly incurred” “in accommodating a net metering system.”

Under current PSC net metering regulations, the direct costs required to connect a net metered customer to a power company must already be paid by the net metered customer, and are not passed on to anyone else.  If a special meter is required, or a new transformer must be installed, the net metered customer must pay for it.  There is no “cross-subsidization” as defined by the new law, and there never has been, when it comes to direct costs incurred by the power company in accommodating a net metered customer.

Apparently, Mr. Fawcett thinks otherwise.  And we know where his thinking comes from.

I heard FirstEnergy lobbyist Sammy Gray state twice during the just concluded legislative session, once to the House Energy Committee and once to the Senate Judiciary, that FirstEnergy disagreed with Mr. Fawcett’s (and apparently AEP’s) interpretation of the bill and agreed with my reading.  It will be interesting to see how FirstEnergy responds officially to Mr. Fawcett’s interpretation of HB2201.

When they were encouraged to support language which would further clarify HB2201’s definition of “cross-subsidization” in the law, AEP’s lobbyist Steve Stewart refused to accept any changes.  We also saw AEP misleading legislators from the beginning on HB2201.  Until Mr. Fawcett’s op ed, however, AEP has never stated publicly or privately what their actual interpretation of HB2201 was.

Now we know.

HB2201 Now on Gov. Tomblin’s Desk: Veto Needed

HB2201 is back on Gov. Tomblin’s desk.  He has until Saturday to veto it.  He needs to veto HB2201 a second time.  HB2201 is completely unnecessary, because net metering was protected in HB2001, and all of the contents of HB2201 are already covered in the WV PSC’s net metering rules.

The Charleston Daily Mail ran an op ed by eastern panhandle solar power installer Bill Anderson today that does a good job of explaining why Gov. Tomblin should veto HB2201.  His piece contains this common sense nugget:

HB 2201 is not a good bill. Good bills are written to fix a well-defined problem. The purpose of HB 2201 is obscure to both legislators and the public.
A week ago, the Charleston Gazette ran my op ed that provides a little more detail about how HB2201 got so bad.  My piece also shows how AEP and FirstEnergy lobbyists perverted the course of an initially well-intentioned bill.
The result of all this meddling and manipulation is that HB2201 is now a mess that casts a cloud of regulatory uncertainty over business investment and innovation in West Virginia.
And as Mr. Anderson concludes his piece:

I respectfully request that Gov. Tomblin veto this bill again. (He vetoed an earlier version due to technical flaws).

A veto will serve the interests the governor’s constituents and enhance the prospects for private investments in energy generation far into the future.

Wellinghoff Nails Net Metering Cross-Subsidization Fallacy

When Jon Wellinghoff was chairman of the Federal Energy Regulatory Commission, he advocated simply horrible policies concerning electric transmission.  Here is just one example.  Since he resigned from FERC, however, Mr. Wellinghoff has become an outspoken champion of sensible electrical policy in the area of new decentralized power.

Mr. Wellinghoff co-authored two excellent articles, here and here, that expand on what I said last week in my post on “cross-subsidization” claims by the electric power industry.  And Jon Wellinghoff knows a heck of a lot more about the electric industry than I do.

Naturally, local distribution utilities feel under-appreciated, if not indignant, when green advocates, tea party activists, and upstart businesses push hard for policies they believe may jeopardize the grid. This utility angst is compounded by declining revenues from waning demand growth and the emergence of disruptive innovations, such as smart thermostats and rooftop solar. Utilities want to slow down change, or at least ensure full recovery of their investments.

Cue the fixed charges

To this end, utilities have been pushing for more fixed charges. Some fixed charge increases simply augment existing “customer charges.” Others are targeted primarily at consumers who choose to install rooftop solar PV systems.

Arguments for these charges tout basic economics and fairness. The basic economics argument contends that since most costs of electric services are fixed, customer fees should also be fixed. Utilities assert that using volumetric pricing, or charging per kilowatt-hour (kWh) consumed, to recover fixed infrastructure and operations costs creates utility risk. Risk raises utilities’ cost of capital and ultimately prices for all customers.

The fairness argument takes aim at solar customers, contending that by significantly reducing the kWhs they consume, they avoid their fair share of the fixed cost. Fixed charges imposed on solar customers, it is assumed, would prevent an unfair shift of cost burdens to non-solar customers.

The reasoning for this shift to fixed charges may seem logical. Utilities are legally entitled to fair compensation for the service they provide. And customers connected to the grid should indeed pay to use it. Both assertions are indisputable. Yet neither proves the need for fixed charges – especially for solar customers.

As we argued in our previous piece, the assertion that solar customers do not pay their fair share is based on a flawed assumption that cost shifters are necessarily freeloaders.

The “economics” argument is equally wrong. As Severin Borenstein, a respected economist and a sharp critic of current solar policies, writes: “…the statement that I have heard a number of times recently that ‘the utility should cover fixed costs with fixed charges’ has no basis in economics when it comes to system fixed costs.” [1] Borenstein accurately notes that fixed-cost recovery can be addressed through smarter, more efficient kWh volumetric pricing that accounts for all cost variations due to timing and location, as well as externalities such as carbon emissions.

Wellinghoff points out that rather than supporting a “free market” and “efficiency” fixed charges on net metered solar producers distort the pricing mechanisms of the electricity market and create incentives for wasted investment.

Utilities have traditionally built enough capacity to ensure peak demand is always met, even during relatively rare moments when every single air conditioner is running at full throttle. But across the nation, peak usage is diverging from average usage (see the graph below). This means that increasingly, much of grid infrastructure is going unused at any given time. In other words, much of what is called “fixed costs” actually represents overcapacity, or waste. And that waste is growing.

Expanding fixed fees does nothing to reduce such waste. In fact, it encourages the opposite. Instead of increasing fixed fees, we need to consider instituting dynamic or time-varying rates that align prices with how and when utilities incur costs. This would both strengthen historical fixed cost recovery mechanisms and reduce investment waste.

Public policy has long resisted time-varying rates for consumers, in large part because they are deemed too confusing for consumers. The expansion of rooftop solar, however, questions conventional wisdom. As Borenstein notes (albeit cynically), the rapid growth of rooftop solar in California is largely attributed to solar installers’ success in explaining the state’s incomprehensible rate structures to consumers. The California experience suggests that, given strong market incentives, third-party providers can effectively assist consumers in understanding sophisticated pricing structures and provide them appropriate options. The goal of policies then should be to develop market incentives consistent with a strong, reliable grid.

Myriad distributed energy resources (DER) offer consumers countless tools to better manage their consumption and reduce grid costs: intelligent communicating devices can enable greater demand response at peak times or automatically start or stop dishwashers and washing machines depending on the high and lows of daily energy prices (see below). Electric vehicles can interact with grid market signals to charge batteries when prices are low and supply grid services when the market allows. And distributed photovoltaic systems can sync with all of the above, deciding when to use generation internally, when to sell it to the market and when to store it locally.

Just as WV legislators are expanding power companies’ monopoly control over net metered customers, other states have been making wiser choices, as Mr. Wellinghoff points out:

The traditional regulated electric utility model is on an unsustainable trajectory – some say a death spiral. Regulators at mission control will need to take creative and likely unconventional measures to guide it back to a safe landing. We commend commissions in New York, Hawaii, Massachusetts, California, and Minnesota for acknowledging the challenge and exploring ways to modernize the grid with DER. We applaud commissions in Idaho, Louisiana, Utah, and others for rejecting proposals for fixed charges on solar customers because of insufficient data.

While other states are moving forward, WV continues to move backwards — which is exactly why Gov. Tomblin needs to veto HB2201.

WV Far Behind in Solar Industry Job Creation, HB2201 Would Only Make It Worse

Dan Heyman has a solid piece on Public News Service about the impact of HB2201 on WV’s already dismal job creation record.

An annual census by The Solar Foundation found the number of jobs in the solar industry is up by nearly a quarter over the year before, and up nearly 90 percent since 2010.
Those are national figures.  When was the last time you heard of any job category in WV that was “up nearly 90 percent since 2010?”  Yeah, me neither.
Solar Foundation president and executive director Andrea Luecke says most of these jobs pay well, and says much of the new work is in sales and installation. As solar power becomes more competitive, Luecke says more people will want it installed.

“It’s been phenomenal. Homeowners, commercial owners, even utilities,” she says. “And as we have more solar installed on rooftops, on land, in parking lots and on top of landfills, we need people to do those installations.”

But WV young people who want to work in this rapidly growing industry will have to leave the state.
But in West Virginia, Luecke says state energy policies have limited the growth of solar employment. A good example is House Bill 2201, now sitting on the desk of Governor Earl Ray Tomblin awaiting his signature or veto. According to solar supporters, the bill could limit the ability of homeowners and businesses who have installed solar power to sell any excess power back to the grid.
Dan ends his piece with the following dismal news:
Only about 300 West Virginians work in solar-related fields, while the census says there are nearly 175,000 people employed in the industry nationwide.

Electric Industry’s War on Solar Comes to WV

In the fight over preserving net metering, the electric industry’s war on solar, declared in 2013 by the Edison Electric Institute, has come to the WV Legislature.  The war has come in the form of two vague and misleading words, “cross-subsidization”.

As House Bill 2001 moved through the Legislature early in the 2015 session, another bill, HB2201 was introduced.  HB2001 repealed the do-nothing ARPS law that was put in place by then-Gov. Manchin and the coal industry in 2009, but preserved the section of the law that authorized the WV PSC to institute net metering in WV.

HB2201 attempted to add a definition of net metering back into the newly constituted net metering law preserved in HB2001 .  However, that definition was slightly modified to add new restrictions on which solar power producers were eligible for net metering.  This modification, which changed an “or” to “and” from the definition of net metering which had been in another section of the ARPS law, signaled that AEP and FirstEnergy, the two Ohio-based holding companies that control WV’s electrical system, were going to use HB2201 to perform stealth attacks on net metering that most legislators thought they had “saved.”

When HB2201 passed out of the House, Del. Folk, a Republican from Berkeley County, successfully added an amendment to the bill which read:

The [Public Service] commission shall assure that any net metering tariff does not create a cross-subsidization between customers within one class of service.

This was the first time the words “cross-subsidization” had crept into the policy discussion about net metering in WV.  The word “subsidization” is part of the power industry’s propaganda lexicon in its fight against solar power.  It is a buzzword implying falsely that solar power needs subsidies to compete “in the marketplace” with fossil fuel power, which is portrayed as requiring no subsidies.

This characterization is particularly ironic in WV considering that the WV PSC has just saddled WV rate payers with huge subsidies to protect AEP’s Mitchell Plant near Moundsville and FE’s Harrison Plant near Clarksburg from having to compete in wholesale energy markets with lower priced alternatives.  The Legislature did its part in 2013 by dumping responsibility for AEP’s failed fuel choices in 2008 onto the company’s rate payers in the form of decades of bond payments to cover AEP’s coal costs with the deceptively named “consumer relief charge.”

Del. Folk’s “cross-subsidization” now joins “free loader” and “standby charges” and all the other propaganda that has been used by power companies in their fights against solar power in Republican-controlled states like Arizona, East Virginia and Wisconsin.

Throughout all solar advocates’ attempts to remove the cross-subsidization language from HB2201, power companies and legislators resisted any change.  In fact, the Senate added a definition of cross-subsidization to the bill which only made matters worse.

To be clear, HB2201 does not direct the PSC to make any changes to its rules concerning net metering.  Nor does the bill require power companies to make any changes in their current rate tariffs.  But the bill does create a legislative directive that could be used the AEP and FE to push for those changes in the future.

The possibility of an attack on net metering is essentially the same as it has always been.  The Ohio holding companies could have tried to add fees or change the way power producers are compensated in the base rate cases both companies filed at the PSC in 2014.  They chose not to attack in those cases, which indicates that attacking net metering is not a high priority for them, right now.

I have personally heard FirstEnergy’s lobbyist tell two different legislative committees that his company only intends the cross-subsidization language to apply to larger solar power systems that might require power companies to change their equipment for interconnection.  When solar advocates lobbied legislators to reflect these statements in changes to HB2201, both FirstEnergy and AEP refused to support the changes.  That is an indication that FirstEnergy is not willing to stand behind the verbal assurances of its lobbyist and may have other things in mind for the future.

So, with HB2201, the WV Legislature has created a classic case of regulatory uncertainty that now hangs over the entire solar power industry in our state.  Hundreds of WV citizens and businesses have made millions of dollars of investment in our state which is now at risk because of sloppy legislating and power company power plays.

West Virginians have one more chance to stop this attack on our state’s future.  Click here to send an email to Gov. Tomblin asking him to veto HB2201 when it crosses his desk in the coming week.  Send your email now, because time is limited.  You can also call the Governor’s Office on Monday morning at 304-558-2000.

Gov. Tomblin Signs HB 2001 Into Law

Gov. Tomblin signed HB 2001 into law today.  The bill repealed the Alternative and Renewable Energy Act of 2009 and replaced it with a statute titled “Net Metering of Customer-Generators,” preserving statutory authority for net metering.

SB 1 remains in the House Energy Committee.  HB 2201, a stand alone bill to insert a faulty definition into the net metering law, remains in the Senate Judiciary Committee.  While it looks more likely that these bills will languish in these committees for the rest of the session, they could be revived and might effect some further changes in the net metering law that Gov. Tomblin signed today.

Thanks to the vigilant and swift acting solar power community in WV, the new net metering law is a great victory for all West Virginians.  As a bonus, the veneer of having something called a portfolio standard has been stripped away from WV’s coal and gas industry controlled state government.

Karl Cates – The Other War: Underreported but Not Insignificant

Karl Cates has an excellent piece over at the IEEFA blog that will give you a good look at how decentralized solar power is under attack by the electrical industry around the US.  Cates also describes how this story is being suppressed in the US media.

Here’s what Mr. Cates has to say:

But there is a war on solar. It’s happening nationally in congressional reluctance to extend tax credits that encourage solar-energy development. It is being waged locally and effectively in states that most recently include Hawaii, Indiana and Washington, where utility and mining interests have had lawmakers draft legislation to put restrictions on solar development.

Organizations pressing the war on solar are numerous and well funded. They include the American Legislative Exchange Council, or ALEC, a regressive organization that brings big companies and lawmakers together to write or rewrite state laws. (ALEC has crossed the line in so many ways on so many issues that some high-profile corporate members have left out of sheer embarrassment, including most recently Northrop Grumman and—before them—Blue Cross/Blue Shield, Coca-Cola, PepsiCo, and Kraft.)

Other soldiers in the war on solar include the Edison Electric Institute, a Washington-based utility-company association that lobbies Congress; Americans for Tax Reform, the Grover Norquist group that focuses maniacally on undermining the financial stability of the U.S. government; and Americans for Prosperity, the shadowy and notoriously well-financed organization that works at the behest of the industrialist Koch Brothers.

The goal of the war on solar, of course, is to kill a budding industry before it can get its legs. Much of its strategy is in a state-by-state campaign the employs two tactics: reducing state-government commitments to the percentage of energy acquired from renewables and repealing “net-metering” laws that fairly compensate homeowners and businesses for the solar energy they produce.

The stakes in the war on solar are not insignificant. The Solar Energy Industries Association, which has been around since 1973, reports it its latest numbers that 36 percent of all new electricity-generation capacity in the U.S. in the first three quarters of 2014 came from solar. It puts the total number of solar-industry jobs in the U.S. at 174,000, almost twice the number of coal-mining jobs nationally.

Yet the war on solar remains starkly underreported, and vastly deserving of much more and better coverage than it’s gotten so far.

Regular readers of The Power Line are familiar with my posts on efforts in other states to suppress decentralized power, stretching back to my post on EEI’s strategic report on the industry’s plan to, as Mr. Cates puts it, “kill a budding industry before it can get its legs.”

While the Republican leadership in the WV Legislature has preserved net metering in its recent repeal of WV’s ARPS law, lobbyists from the two Ohio-based holding companies that control WV’s electrical system have managed to get amendments to the new net metering bills that open the door for future mischief for ALEC and its minions.  Citizens have let our legislators know that we are watching them closely.

Power Company Misinformation on HB2201 Exposed

A funny thing happened in the Senate Energy, Industry and Mining Committee meeting this afternoon.  The Committee took up and passed HB2201 without any changes, but a lot more happened during the discussion of the bill.  AEP’s obstruction of solar advocates’ efforts to correct a serious error in the bill collapsed in disgrace.

HB2201 is very odd.  Designed by the House Judiciary Committee as a way to add the definition of net metering back into the new article in the WV Code that remains after the repeal of the ARPS joke law, the Committee contradicted both the existing definition of net metering in the current statute and the Senate’s Senate Bill 1 that also added a definition of net metering to its net metering statute.

Sub-sectiion (11) of §24-2F-3 (current statute) reads as follows:

(11) “Net metering” means measuring the difference between electricity supplied by an electric utility and electricity generated from an alternative or renewable energy resource facility owned or operated by an electric retail customer when any portion of the electricity generated from the alternative or renewable energy resource facility is used to offset part or all of the electric retail customer’s requirements for electricity. [emphasis added]

HB2201 reads:

(a) “Net metering” means measuring the difference between electricity supplied by an electric utility and electricity generated from a facility owned and operated by an electric retail customer when any portion of the electricity generated from the facility is used to offset part or all of the electric retail customer’s requirements for electricity. Provided, That this section shall not preclude an educational or religious organization customer-generator, that either owns or operates its own facility, from utilizing a net metering system in this state. [emphasis added]

What’s the difference?  HB2201 requires that a retail electricity customer is only eligible for net metering if he/she both owns and operates a solar power system.  Current law allows a person or business that does not actually own the solar panels to still get the benefit of those panels if electricity passes into their neighbors’ homes from the system on their roof.

One of the fastest growing segments of solar power growth in the US is the leasing of solar panels owned by installers or businesses to home owners or other businesses.  Many renters who live in houses with solar panels also get the benefit of net metered electricity in other states.  Businesses that install solar panels may have reasons for having their panels owned by one company and their building owned by another company, and there is no need for government interference in their freedom to do this..

The House’s HB2201 change in the current “or” language is a radical departure from current policy and would prevent all of these options for making solar investment more affordable for West Virginians.

Now comes the strange part.

AEP’s head lobbyist has been telling legislators for the past week that HB2201’s “and” language is already in WV’s net metering law.  That is clearly wrong.

Today, in the Senate Energy, Industry and Mining Committee’s meeting, that same lobbyist asserted the same wrong claim to the committee members.  He was publicly corrected in the meeting by the Committee’s attorney, who informed him that, in fact, the language in the current law clearly stated that a retail customer could either own or operate a solar power system and still have that system eligible for net metering.

How embarrassing.

Let’s hope AEP’s lobbying team will be honorable enough to admit to Senators that they were wrong.  Let’s hope that they will support correcting HB2201 to allow both owning and operating net metered PV systems when the Senate Judiciary Committee takes up HB2201 this week or next.

WV Senate Passes SB 1 with Net Metering Protection

Just a little while ago, the WV Senate passed Senate Bill 1, repealing all of the current Alternative and Renewable Energy Portfolio Standard law, except for the authorization of net metering in WV.  The Senate Bill 1 renames the law, §24-2F Net Metering of Customer Generators.

Two amendments were added to the bill.  An amendment was added in the Senate Energy, Industry and Mining committee to allow customer generators to donate excess net metering credits to charities that provide assistance for low income electric customers.  The other amendment was added on the floor today that requires the PSC to ensure that no costs of net metering are passed on to other rate payers.  Of course, this has never been a problem in WV, and the intent of this amendment has long been covered by §24-3-2 which prevents power companies from giving any special treatment to any group of rate payers.  Net metering has operated for 7 years in WV under this existing statute without any problems.

Earlier in the week, Senate President Cole made it clear that SB 1 will be on the fast track after it crosses over to the House.  The Charleston Gazette reporter Phil Kabler reported earlier in the week:

Cole expects the legislation to be passed and sent to the governor by the end of the week.
That is what the fast track looks like at the WV Legislature.  We will finally be rid of the fake ARPS law that holds back renewable power development AND, thanks to active and effective citizens, we will still have net metering protected in law.


Hoppy Wants Free Market for OH-Based Power Companies, But Not for West Virginians

Yesterday, Hoppy Kercheval weighed in on the repeal of WV’s do-nothing ARPS law.  As Power Line readers know, I have no problem with repeal of the law, as long as net-metering for West Virginians is preserved.

But that is not the issue I want to address in this post.  In his piece, Hoppy expressed this opinion:

Why should the government dictate to utilities where they get their sources of energy?  West Virginia gets 95 percent of its electricity from coal.  It’s a cheap and reliable fuel that keeps energy costs down for consumers, which is why utilities burn coal.

Mr. Kercheval seems to have lots of problems when “government dictates to utilities” and those dictates encourage diversification of WV’s energy resources.

As for his claims that coal is “cheap and reliable,” they are very shaky.  Back in 2012, the WV Legislature passed special legislation which raised rates on AEP’s WV customers for decades because coal supplies dried up on the open market, and coal prices went through the roof.  Instead of applying a 40% rate increase to cover these costs, AEP went begging to the Legislature to saddle their APCo and Wheeling Power customers with decades of debt and interest payments.  In the 2012 legislative session, Republicans and Democrats responded by “dictating” that AEP should get its way.

When the Harrison Power Station couldn’t sell its coal-fired electricity on the open market and FirstEnergy dumped the plant on WV rate payers, I didn’t hear Mr. Kercheval complaining.  The WV PSC’s approval of the Harrison transfer is about as blatant a case of government dictating higher electric rates, by rescuing a power company from the free market, as we have seen in recent years.

If Mr. Kercheval doesn’t like government “dictating” what power companies do, does he think this statute should be repealed?

(b) The Legislature creates the Public Service Commission to exercise the legislative powers delegated to it. The Public Service Commission is charged with the responsibility for appraising and balancing the interests of current and future utility service customers, the general interests of the state’s economy and the interests of the utilities subject to its jurisdiction in its deliberations and decisions.

In exchange for this regulation, the Legislature has granted legally authorized monopoly status to electric utilities owned by Ohio-based holding companies AEP and FirstEnergy.  West Virginians must buy their electric power from these monopolies.  Any business person or residential customer that generates electricity is required to sell that electricity only to the monopoly that is authorized by government to operate in that area.

Mr. Kercheval is concerned only when government “dictates” to monopolies, but is he concerned when government licensed monopolies themselves dictate to West Virginians?

When anyone who talks to you about electricity in West Virginia starts talking about the free market, you know something fishy is going on.  There is no free market for West Virginia citizens who need to buy or sell electricity.  There is only government dictated monopoly.

Mr. Kercheval only wants freedom for Ohio-based monopolies, not West Virginians.

West Virginians Standing Up to Protect Net Metering

Back in 2009, the WV Legislature passed the Alternative and Renewable Energy Portfolio Standard law.  For years, Republicans have falsely claimed that the law was a “cap and trade” assault on the coal industry, and Democrats mistakenly claimed that the law helped renewable power.  Neither of these claims is true.

Republicans and Coal Democrats jumped on the ARPS law right out of the chute at the Legislature this year, introducing repeal bills in both houses, Senate Bill 1 and House Bill 2001.  Both bills are identical.  They repeal all sections of the Alternative and Renewable Energy Portfolio Standard law.

As we know, the law did nothing to help development of new renewable power in WV.  FirstEnergy lobbyist Sammy Gray admitted this yesterday to the Charleston Gazette’s reporter Phil Kabler:

While proponents of the bill criticized the law for putting, as Senate Majority Leader Mitch Carmichael, R-Jackson, termed it, “onerous requirements on power companies,” FirstEnergy lobbyist Sammy Gray said the power company already can meet the alternative energy requirements through the use of waste coal, supercritical pulverized coal and hydroelectric power.

Asked if other power companies operating in the state also can comply with the act, Gray told House members, “My understanding is they can meet these standards, also, but I can only speak for FirstEnergy.”

So, repeal of the ARPS law matters little to WV’s solar power industry, EXCEPT that it includes the only legislative authorization of WV’s net metering rules. Those net metering rules require power companies to buy surplus power from WV homeowners and businesses at the same rates that these customers pay for power.  Hundreds of homeowners and small business people have invested hundreds of thousands of dollars in solar power equipment because of this commitment from the Legislature in 2009.  These installations have created hundreds of new jobs for West Virginians.  Repeal of the net metering provisions of the 2009 would undercut all this investment.

Take a look at the first page of the WV PSC’s current net metering rules.  See that “1.2. Authority. — W. Va. Code§ 24-2F-1 et seq.”?  That is the ARPS law.  If the ARPS law is repealed, the legislative authority for the PSC’s net metering rules, among the best in the US, is removed.

Fortunately, citizens across WV mobilized to let legislators know about this problem.  We had only a few hours in which to do it, because, in a surprise move, newly appointed Republican committee chairs in both Senate Energy, Industry and Mining and House Energy put the repeal bills before their committees for a vote.  Members of these committees reported receiving over 90 emails and phone calls in the span of three hours before their committees met.

There was extensive discussion of the net metering problem in the Senate EIM committee.  Democratic Sen. Herb Snyder and Republican Senator Mitch Carmichael, both spoke in favor of amending the repeal bill to keep net metering authorization in the WV Code, no matter what happened with the rest of the ARPS law.  As Phil Kabler reports:

Senate Energy Committee members delayed advancing their version of the bill Thursday, to allow a rewrite that will repeal most of the Alternative Energy Portfolio Act — but retain the net metering provisions.

This is a major victory for everyone in West Virginia who wants to reduce electric rates and break the monopoly hold that Ohio-based AEP and FirstEnergy have over our electrical system.

The House repeal bill was voted out of House Energy unchanged and moves to the House Judiciary Committee.  The House needs to address the net metering issue, and so far, the Republican leadership has failed in their “leadership” on the net metering issue.

If you support solar power development in WV, you can let legislators know.  WV Sun has set up two easy Web-based messages that you can send to our legislators.  You can send them a general message stating your support for solar power in WV at this link.  You can also send targeted emails to members of the Senate EIM committee and the House Judiciary committee (the next stop for HB2001) at this link.

Don’t wait.  Send these messages now.  To be effective, communicating with legislators has to be done at exactly the right time.  Now is that time.

Is WV’s ARPS Law “Cap and Trade”? Definitely not.

Both Republicans and Democrats have displayed stunning ignorance in recent debates about WV’s Alternative and Renewable Energy Portfolio Standard law.  Democrats claim that the law promotes renewable power, which it doesn’t, and Republicans claim that the law is some kind of “cap and trade” scheme, which it isn’t.

In the last couple of election cycles, WV Republicans have launched an attack on the ARPS law as part of their “war on coal” fantasies.  This attack uses the claim that the ARPS is a “cap and trade” scheme, because “cap and trade” is associated with purported Obama administration attempts to limit carbon emissions in 2009.

Take a look at the ARPS law at this link.  Are there any limits placed on carbon emissions in this law?  Is there any scheme to trade carbon emission credits?  The answer is no to these questions.

What “caps” there are in the bill are set so high that power companies can meet them from their existing generation portfolios, until the law sunsets in 2025.  These “caps” aren’t caps at all if they don’t push power companies to do anything different.

In fact, the bill sets standards designed to encourage specific kinds of electricity generation, among them advanced coal-fired electricity, electricity from natural gas, as well as from renewable sources.

As we know from reports filed with the WV PSC by the two Ohio holding companies that control almost all of WV’s electricity, there is no need to trade any credits of any kind to meet the law’s targets, because AEP and FirstEnergy can meet all of the law’s targets from their own sources of generation, from the passage of the bill in 2009 until 2025 when the law expires.

So, there is no “cap” and there is no “trade.”

In the past, Democrats have tried to defend the ARPS law as somehow promoting renewable power.  WV’s law, unlike real renewable portfolio standards in other states, includes credits for coal-fired and natural gas fired generation.  As noted above, AEP and FirstEnergy do not need to buy any electricity or credits to meet WV’s fraudulent “standard” for the duration of the law’s life.

As I have argued numerous times, the WV ARPS law was designed by former Gov. Manchin and the WV Legislature specifically to arrest, “cap” if you will, WV citizens from pursuing innovative renewable power independent of the two Ohio monopolies that control our electrical system.  The confusion that the law has created in the political debate is just one more feature of the law designed to stifle factual discussion of the issue.

As the new Republican leadership, with help from coal industry Democrats, moves forward with its attempt to repeal WV’s ARPS law, don’t be taken in by claims that the law has anything to do with “cap and trade.” As I have noted in the past, there are lots of reasons to repeal the ARPS law, but it should be done for the right reasons, not out of ignorance inspired by false propaganda.

The one feature of the law that is vital to WV’s future is the continuation of the legal authority granted to the WV PSC to require WV’s Ohio-based electric monopolies to provide net metering options for WV’s solar power producers.  The net metering provision of the law, found in §24 – 2 F- 8 of the WV Code, allows homeowners and businesses to get one for one credit against their electric bills for every kilowatt hour they feed back into the power companies.