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WVDOE: Energy portfolio standard won’t hike rates, harm jobs

Repealing West Virginia's renewable energy portfolio standards was made a top Republican party priority for the 2012 legislative session, but the state's top energy official said their primary concerns are unfounded.

Majority Leader Tim Armstead, R-Kanawha, said former Gov. Joe Manchin's Alternative and Renewable Energy Portfolio Act is stifling job growth and raising electricity rates for residents across the state.

The legislation requires 10 percent of electricity sold in West Virginia to come from renewable or alternative sources by 2015. By 2025, the share is to be higher than 25 percent.

Jeff Herholdt, director of the West Virginia Division of Energy, points out that only about one-third of the electricity generated in West Virginia is actually consumed in the state. The Energy Portfolio Act only applies to electricity sold in West Virginia.

"When you look at our portfolio, the challenge has been the impact on coal and coal jobs, well, we now have that plant in Longview coming online," Herholdt said. "That's advanced supercritical (technology), one of the cleanest power plants in the East."

The Longview plant, with its 695 MW capacity, is considered alternative energy and qualifies for credits under the Portfolio Act.

Pointing out Longview as an example, Herholdt illustrates the broad nature of the act. The legislation includes the coal industry in a number of technologies still considered alternative or renewable.

Herholdt said the Portfolio Act does not harm coal jobs but simply encourages advanced, clean-coal technologies. He said utilities submitting their compliance plans have not shown any signs of opposition or resistance to the Portfolio Act.

As for potential hikes in electricity rates for West Virginians, Herholdt said, any energy source utilized must go through a process that ensures the technology will not result in a spike in energy prices.

"The Public Service Commission is responsible for the cost and quality of utility service," Herholdt said. "You can't just slip in something into the portfolio and expect it to have a market in West Virginia just because it is portfolio-eligible. It also has to be a competitive energy source. The Public Service Commission won't let it enter the resource base."

The Portfolio Act, Herholdt said, says "we're open to other energy sources."

"Our challenge is, we have a lot of the politics today excluding coal from the discussion," Herholdt said. "When the president said, ‘I'm for all of the above,' he probably didn't mean ‘and coal.' We're demonstrating we are open to a diversified energy portfolio in the state of West Virginia."

Herholdt said he hopes the nation will also be supportive of a diverse portfolio of domestic energy sources. The West Virginia GOP's comparison of the Portfolio Act to federal cap-and-trade legislation does not agree with Herholdt's interpretation of the act.

"There's no cap-and-trade It's just to incentivize getting our electric utilities to consider clean-coal options as a way to expand their electric power generation fleet in West Virginia," Herholdt said. "The challenge to coal utilization in West Virginia is not coming from the State of West Virginia."

Alternative and renewable sources, defined by code to include things such as natural gas, coal-to-liquids and other fossil-fuel based energy sources, still count as credit for fulfilling the requirements of the Portfolio Act. Credits for renewable and alternative energy can be bought and sold.

The initial results of the 2011 Alternative and Renewable Energy Planning Assessment, presented to the Joint Committee on Government and Finance, identified minimal effect on the West Virginia coal industry. West Virginia utilities, the report stated, have said they will not need to build any new non-coal generation to meet standards of the Portfolio Act.

"Because of the diverse array of resources covered under the Portfolio Act, a number of existing plants considered to be ‘conventional' generating plants qualify to meet the standard," the initial assessment states. "It is not certain whether this directive actually refers to keeping natural gas or supercritical coal plants competitive, although those plants qualify under the Act."

A large portion of the alternative and renewable energy sources utilities have submitted for compliance have included coal-based fuels. Thousands of credits were awarded to some of the state's largest utilities for utilizing waste coal, using supercritical technology, waste- and tire-derived fuels and burning of natural gas.

Based on information gathered by the WVDOE in 2011, about 10,145 MW were awarded for use of "alternative" energies. "Renewable" energies accounted for about 1,190 MW of the utilities' compliance plans. Each megawatt hour of renewable energy is equal to two credits, and each megawatt hour of alternative energies is equal to one credit.

Of the energies classified as renewable by the Portfolio Act, 723 MW are planned to be wind-generated, 327 MW is to come from hydropower, 117 kW is come from solar power and the remaining 140 MW comes from a project mixing 10 percent biomass with coal.

Biomass energy, Herholdt said, was widely considered carbon-neutral prior to the current presidential administration. The technology, he said, has a lot of potential for energy generation in the U.S.

"Biomass has not taken off," Herholdt said. "Biomass is kind of waiting for the other shoe to drop, on how the administration on D.C. looks at wood-based energy projects."

Herholdt said another 629 MW of qualifying alternative renewable projects were in preliminary permitting process.

An annual assessment of the act is due from the Public Service Commission and the Public Energy Authority Division of Energy July 1.