West Virginia Capitol dome

CHARLESTON — A group of lawmakers voted Monday to cut $12.5 million from the state budget in the hopes of helping a bankrupt company make a coal-fired power plant slightly profitable.

The West Virginia House of Delegates Finance Committee considered House Bill 20 during a special session that Governor Jim Justice had called to focus on “education betterment.”

Justice, a Republican and coal baron, asked them to consider the bill, which was not made available on the legislative website for the public to look at until just before committee debate on Monday.

The bill would exempt “merchant power plants” from the state business and occupation tax.

Mark Muchow, deputy secretary for the state Department of Revenue, summarized merchant power stations as “someone seeking a buyer, as opposed to a public utility.” He told lawmakers that most other plants in the state now have contracts to provide power to consumers and are therefore regulated by the Public Service Commission, which negotiates rates.

The Pleasants Power Station, meanwhile, sells its power on the market and isn’t beholden to the Public Service Commission, but must pay the B& O tax.

Pleasants Power Station would be the only power station to fall under the definition. It employs about 160 people in Pleasants County and the surrounding area.

John Judge, president and CEO of First Energy Solutions, said that the company’s B& O tax for the power plant was set at $12.5 million years ago. First Energy Solutions is a subsidiary of First Energy Corp. and is filing for bankruptcy and separating from that company, he said. The tax cut would be temporary but Judge told them the company needs it to be made permanent.

He told lawmakers that the power station is “very much on the edge between profitable and not profitable.” He told them that the market for thermal coal couldn’t keep the plant open, and the plant would close within the year without the tax cut.

Bloomberg reported that First Energy Solutions has said it would eventually shut down its fossil fuel and nuclear power plants without legislative help and “meaningful market reform,” as power companies have turned to cheaper natural gas and renewable energy. The bill would go into effect July 1, 2020. Judge said the bill couldn’t wait because the company will be attempting to sell the power at auction in August. Pleasants County Commissioner Jay Powell told lawmakers the company closure would be “devastating” for Pleasants County.

The plant used to pay nearly $6 million in property taxes, which mainly went to the school system. He said the company now pays about $1.2 million.

Delegate Isaac Sponaugle, D-Pendleton, noted that the power plant, which was once worth more than $200 million, is now worth about $67 million. Sponaugle asked if it was the biggest employer in Pleasants County.

“At one point they were,” Powell said. “The school system’s probably the highest employer, truthfully.”

Lawmakers approved the tax cut on a voice vote. No one was heard voting “nay.” The bill still needs to be voted on the by the full House and Senate.

During the 2019 legislative session, lawmakers also approved a bill to cut the severance tax on thermal coal from five percent to three percent over three years, cutting tens of millions from state revenue.

Economists continue to predict long-term declines in the coal industry, while West Virginia state revenue is currently seeing a temporary uptick, in large part due to natural gas pipeline construction and in small part due to an uptick in the exportation of metallurgical coal.