The special session that once was focused on education reform saw a bill introduced and passed out of committee to help bail out a struggling coal power plant. HB 207 would exempt “merchant power plants” from the state’s business and occupation tax. The Pleasants Power station in Pleasants County would be the only power plant in the state affected by the bill.
A merchant power plant, like the Pleasants Power Station, is not regulated by the Public Service Commission, and sells the electricity it produces on the open market, as opposed to through a contract to a public utility.
With abundant cheap natural gas, the market for thermal coal has declined, and according to testimony John Judge, the CEO of First Energy Solutions, the owner of the Pleasants Power Station, the current market for thermal coal is not enough to keep the power station open and profitable.
Instead of allowing the market to work, the legislature, led by Governor Jim Justice, has decided to step in, and in a classic case of picking winners and losers, offered a tax cut tailored for specifically for the power station to make it profitable, in spite of market forces.
The tax cut will save the Point Pleasant Power Station $12.5 million per year. As with most tax cuts, there was no discussion of how the lost revenue would be made up, or what areas of the budget would be cut to accommodate the lost revenue. According to the CEO of First Energy, $12.5 million would be the difference between keeping the station open and it closing down.
The Point Pleasant Power station employs roughly 160 people. If a $12.5 million tax cut is needed to keep those people employed, it comes out to roughly $78,125 per job. In other words, with the tax cut, the state would be essentially covering all of the power station’s labor costs.
Since the source of the Power Station’s woes is a declining thermal coal market, it’s notable that during the regular legislative session, the legislature passed a $64 million severance tax cut for thermal coal. So once again, the while the market is moving away from coal, lawmakers are doing all thay they can to interfere and prop up coal.
We have a great newsletter, join below: