Last month, the West Virginia Public Service Commission denounced a federal transmission rule that would mitigate rising electricity costs and increase grid stability.
By Sarah Elbeshbishi
This story was originally published by Mountain State Spotlight. Get stories like this delivered to your email inbox once a week; sign up for the free newsletter at https://mountainstatespotlight.org/newsletter.
In May, federal energy regulators issued a new rule to reduce electricity system gridlock, ensure energy reliability and lower power costs. The Federal Energy Regulatory Commission labeled it “historic”. The rule would make it easier for new power plants to get online, which will help the continued growth of renewable energy and help drive prices down. Experts have celebrated the move, calling it a “landmark” rule.
A month later, West Virginia’s utility regulators denounced the FERC rule.
“The agency’s action substantially undermines states’ role in transmission planning, and will not result in just or reasonable rates,” state Public Service Commission Chairman Charlotte Lane said in a press release.
But both FERC and experts have dismissed those concerns and said that the rule will address the current issues around how electricity is transferred, which has driven higher prices for ratepayers. The rule is likely to lower power costs for West Virginians by targeting transmission inefficiencies and adding new, cheaper sources of energy to the electric grid.
The PSC also noted in its press release that the rule coincides with the Biden administration’s clean energy push and that — at the time of the ruling — FERC’s two Democratic commissioners voted for the rule while sole Republican voted against it.
“What we’ve seen is the political backlash to the rule has been completely divorced from the merits of the rule,” said Devin Hartman, director of energy and environmental policy at R Street Institute, a nonpartisan policy think tank.
Transmission refers to the moving of electricity, often over long distances and at high voltages, from power plants that generate it to distribution facilities closer to businesses and homes that use it.
The federal rule aims to address the current deficiencies in how transmission is planned and built, which have resulted in ballooning electricity prices across the country. Escalating rates have hit hard in West Virginia, as state regulators continue to rely on coal, which is becoming even more expensive and unable to compete with natural gas and renewable energy.
While once home to some of the lowest power rates in the country, West Virginia is now among a number of states that have seen significant jumps in electricity costs. Average monthly residential bills in the state more than doubled between 2002 and 2022, from about $67 to $142, according to data from the U.S. Energy Information Administration.
PSC actions to continue the state’s reliance on coal play a large role in the quickly rising power costs across West Virginia, according to a 2024 energy report by Energy Innovation Policy & Technology, a nonpartisan energy research group.
In 2021, the PSC allowed utility companies to pass along the $448 million cost of regulatory upgrades onto West Virginia ratepayers to keep three coal plants open.
But this new FERC rule could help address the state’s surging power rates.
The rule will require transmission operators, including utility companies, to produce a regional plan that identifies the long-term needs over 20 years and update the plan at least once every five years. Operators will also be required to conduct cost-benefit analyses to ensure reasonable rates for customers.
“Getting these new, cheaper forms of electricity, more broadly distributed and able to be taken advantage of by West Virginia is going to stem the flow of cost increases or, in the long-term, lower electricity rates for the state,” said Mike Becher, an attorney for Appalachian Mountain Advocates.
Currently, transmission is being built with no required cost-benefit tests, competitive bidding processes or regulatory oversight, which has created the prime conditions for significant cost increases. But this new rule addresses all those issues and puts a focus on regional transmission projects instead of local ones, which are currently being overbuilt.
The annual amount spent on electric transmission by utility companies from 2000 to 2019 increased by more than $30 billion, according to the EIA. Of the $40 billion utilities spent on transmission in 2019, more than half of it was invested in new transmission.
Following the federal ruling, West Virginia utility regulators asked FERC to revisit the rule in an 18-page filing. FERC denied the requests to revisit the rule last month. Days afterwards, the PSC and the Ohio Public Utilities Commission’s Office of the Federal Energy Advocate filed a petition requesting a review of the rule with the 6th U.S. Circuit of Appeals.
In their filing, the PSC argued the rule would make West Virginians unfairly pay for projects driven by other states’ decarbonization policies. However, the rule addresses cost concerns, stating that customers are only required to pay for what they benefit from.
West Virginia is part of the PJM, which operates the electric grid and plans the movement of electricity to meet demand across 13 states in the Mid-Atlantic region.
And while states like West Virginia are not prioritizing decarbonization or renewable energy sources, their policies still drive a need for more transmission, according to Claire Wayner, senior associate at RMI, a nonpartisan energy research group.
“We’re seeing states like West Virginia point to clean energy policies as if they’re different from other state policies. But West Virginia and other, kind of, non-clean energy states in PJM, they also have policies that are driving demand for more transmission,” Wayner said. “So really, the benefit of regional long-term planning is meeting all state policies, not just the clean energy ones, in a least-cost manner.”
