Electricty Cost Inflation in West Virginia Causing Pain

Inflation has been getting a lot of attention during this election season and for good reason. Prices for most essentials, including housing, food, health care, and energy are all increasing and these increases can be painful and difficult to adjust to. 

It’s difficult to measure in any absolute way how inflation affects any particular family, because families differ on how well or not they can absorb increases in costs. So if you’re in a relatively rich family you feel the pain of inflation less than you might in a poor family.

If we look at a state as a kind of family, a poor state will feel more inflation pain than a rich state. West Virginia by most measures is a poor state and inflation here hurts a lot more than it does in our richer neighboring states. 

In West Virginia, it’s the cost of electricity that’s currently generating a lot of pain. It’s not because our state has the highest electric rates in the nation. Those rates are just a little above average for the country. But it’s because our electricity rates have been rising much faster and more frequently than in other states and the bills are taking a larger and larger hunk out of many people's budgets, especially those on fixed incomes. 

The major factor in these increases is explained in a book The Coal Trap, by James Van Nostrand who specializes in energy law at the WVU College of Law. Van Nostrand paints a picture of electric utilities coming to the West Virginia Public Service Commission (PSC) asking for rate increases to cover the effects of inflation on their own costs. The PSC must review and approve any proposed increase in a regulated utility. In almost all cases, according to Van Nostrand, the PSC approves those rate increases and it does so because it has bought into the idea that our coal industry needs protection. 

Our electric utilities run predominantly on coal, far more so than any other state. The problem, however, is that coal fired electricity is becoming more expensive to produce. It’s not so much because coal itself is expensive, but because burning coal is dirty, and reducing the air and water problems that dirty fuel produces is expensive. 

Then, too, the plants that burn the coal are reaching the end of their life span and are requiring more expensive maintenance. Refitting a coal fired plant to burn some cheaper fuel, such as natural gas, is also an expensive proposition, but because of bond obligations, which the PSC approved years ago, West Virginia is locked into its existing plants until 2030. 

West Virginia has a love affair with coal, but it’s turning out that the coal industry is failing, and our citizens, with the blessing of the PSC, are paying an increasingly heavy cost to keep the love affair going. 

A longer version of this article is available here on AuthenticWV.