West Virginia lawmakers passed a bill on Tuesday that will give a $12 million tax cut to a struggling coal-fired power plant in Pleasants County.
House Bill 207 will exempt the 1,300-megawatt coal-fired Pleasants Power Station from paying state Business and Occupation tax for merchant power plants, or sites that sell electricity to wholesalers and not to retail customers.
Supporters of the bill argue the tax cut will save 160 high-paying jobs at the plant.
Operated by FirstEnergy Solutions, the Pleasants Power Station is one of only two coal-fired merchant plants in West Virginia, and the only merchant power plant paying the B&O tax. It’s one of the state’s eight major coal-fired power plants, the other six of which provide to retailers and are regulated by the West Virginia Public Service Commission.
As FirstEnergy Solutions works to emerge from bankruptcy, CEO John Judge told the House Finance Committee on Monday that a $12 million tax break could make or break it for the Pleasants plant, which is slated to stay open until at least May 2022, according to a bankruptcy agreement made last year with FES’s creditors.
“Given the revenue and cost situation of this plant, it is very much on the edge,” Judge said. “Even $12.5 million, in this case, makes a difference.”
Judge told the committee the plant generates $400 million in annual economic activity, leaving some lawmakers to question how effective the $12 million tax break could be.
The compressed timeline for debate of the bill drew criticism from Democrats. On Tuesday, before the House bypassed its three-day rule to pass House Bill 207 with one vote.
“We got this bill on Sunday and people wanted us to suspend the rules on Monday,” said Democratic Del. Barbara Fleischauer from Monongalia County. “And with all these questions — normally when we give a tax break, we look at it compared with the rest of our budget.”
Del. Larry Rowe, a Democrat from Kanawha County, tried unsuccessfully to amend the bill to limit the tax exemption to five years, allowing the Legislature to study the economic implications of the bill during the regular session. There’s currently no cap on how long the exemption will last.
Republicans said on Tuesday the bill is an effort to “level the playing field” in a state where most power plants paying the B&O tax can pass that expense onto their retail customers. With an amendment to the bill from Republican Del. Vernon Criss of Wood, the B&O tax exemption will begin Jan. 1, 2020.
The plant is the largest source of property taxes for Pleasants County. Proponents of the bill said the plant provides $400 million in annual economic activity, $128 million in economic impact and $1.2 million in local taxes to the county commission and the county board of education.
This is not the first time FirstEnergy Solutions has sought aid for the Pleasants plant and its other generators.
In 2016, former Pleasants owner Allegheny Energy Supply, a FirstEnergy Corp. subsidiary, put the plant up for sale. The company announced in February 2018 it would close the facility unless it could find a buyer. An attempt to sell the power plant to other regulated FirstEnergy subsidiaries, Potomac Edison and Monongahela Power, was shot down by federal regulators in January 2018.
Last October, Allegheny Energy Supply agreed to transfer the plant to bankrupt subsidiary, FirstEnergy Solutions as part of a larger settlement agreement approved by a bankruptcy court.
Several Republicans in the House said on Tuesday that House Bill 207 would save 160 high-paying jobs at the Pleasants plant. In addition, the company each year temporarily brings in a few hundred union tradespeople to work during a scheduled outage.
Some Democrats argued the tax cut ultimately won’t be enough to overcome the shifting market forces upturning the power sector. Over the last decade, cheap natural gas and the falling prices of renewable energy generation has posed a major economic challenge for coal-fired generators.
“If I believed that three years from now these jobs will be here, I’d vote for this bill in a heartbeat,” said Del. John Doyle, a Democrat from Jefferson County. “It is simply the economy and the market. … If I am right, then House Bill 207 is not a job saving bill, it becomes just another corporate giveaway.”
Democratic Del. Evan Hansen of Monongalia County called for a larger discussion on climate change. He cited the ongoing energy transition away from coal as context for what’s happening at the Pleasants Power Station.
“I don’t think it’s appropriate for us to have a discussion about coal in West Virginia, and coal-fired power plants… without at least addressing climate change in that discussion,” Hansen said.
He added that, for him, the issue isn’t about saving the jobs, it’s about ensuring there are new, more energy-responsible jobs to take their place.
“I think, we as a Legislature, have a responsibility to [do] what we can to manage that transition, so we have a just transition,” Hansen said. “So that we’re not just putting a bandaid on each crisis that comes our way, and not just giving tax break after tax break when they ask for it.”
The House passed the bill 77 to 5, with 18 members absent or not voting. The Senate passed it unanimously with 6 members absent or not voting.
Emily Allen is a Report for America corps member.