West Virginia’s manufacturers form the foundation of communities across the state. Manufacturing in our state has an economic output of $7.5 billion and employs 50,000 West Virginians in generational jobs who make the products America relies on.
For years, our great state has touted affordable energy. But the truth is that, while electricity prices in the PJM Interconnection (the grid in which West Virginia is one of 13 states) are competitive, our state arguably has missed out on benefits of competition because of traditional regulation that, among other things, requires ratepayers to bear the burden of costs for utility-owned power plants.
Across the regional grid that West Virginia shares, independent power producers bring on affordable wholesale power generation that is sold to the grid as needed. This has not only lowered prices for other states across the interconnection, but emissions, as well.
Some utility-owned power plants in West Virginia are partially owned by out-of-state utilities and, therefore, share jurisdiction with those states, as well. While West Virginia is a regulated market where the utilities are given an approved rate of return paid for by captive ratepayers, other states take a different approach, in which electricity users have freedom of choice to obtain a best price for power.
The Harrison Power Station, commissioned in 1972, was one such plant. The power plant was partially owned by Mon Power (a subsidiary of First Energy) in West Virginia and partially owned by an out-of-state sister company. In 2013, the Public Service Commission allowed First Energy to “sell” the large part of the plant owned by its out-of-state subsidiary to Mon Power, and millions of dollars in costs became the responsibility of West Virginia ratepayers.
There are other power plants in West Virginia that could see a significant cost-shift to the state’s ratepayers through related tactics.
Beyond what has happened at a state level, there are paralleling efforts in Washington, D.C., to convince the Federal Energy Regulatory Commission and the Senate Energy and Natural Resources Committee (under Sen. Joe Manchin, D-W.Va.) to promote similar vertically integrated power generation that has kept West Virginia from benefiting as much as its PJM neighbors.
In reality, the vertically integrated model for power generation is a monopoly framework that prioritizes government regulation over free markets and customer choice. In South Carolina, another “regulated” state, electricity customers paid $9 billion for nuclear plants that were never constructed. And in Georgia, each Georgia Power household has had to pay more than $850 to fund the construction of a nuclear plant that has no plan to start operations.
The monopoly-driven model also does not facilitate innovation or more sound environmental outcomes. Access to competitively sourced renewable power and the ability to meet corporate emission reduction goals are ever-increasing priorities for many manufacturers. In addition, a bipartisan group of former Federal Energy Regulatory Commision members urged current FERC officials in June to expand organized wholesale power markets across the United States, and they noted that more than 80% of renewable generation has been deployed in the organized market regions.
Manufacturers are some of the largest consumers of electricity, and we stand to benefit by increased competition of power generation choices. More choices among private power providers help enable affordable prices for ratepayers in the manufacturing community.
Manufacturers are job creators. From food products to aerospace parts and everything in between, manufacturing is a significant and diverse element of the West Virginia economy. And all of it takes electricity.
For West Virginia to be competitive in the future, we must fully realize the savings that free market competition and customer choice can create, in part as a result of independent wholesale power producers operating in the PJM Interconnection, which includes West Virginia.
We have an important voice for what the future of West Virginia holds, and we cannot remain silent in allowing traditional monopoly regulation of power to continue without challenge or meaningful change. We must educate our policymakers about how wholesale competition and power production has lowered costs and emissions in our grid and around the nation, including with lower consumer prices for the largest users in states like Ohio and Pennsylvania.
West Virginia’s manufacturing base should be able to realize those same benefits. And, for the sake of our West Virginia economy, the sooner, the better.
