Energy policy in West Virginia

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Energy policy in West Virginia
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Quick facts
Energy department: West Virginia Department of Commerce Energy Division[1]
State population: 1.9 million
Per capita income: $34,477
Energy consumption
Total energy consumption: 724 trillion BTU[2][3]
Per capita energy consumption: 390 million BTU
Energy spending
Total state energy spending: $8,888 million
Per capita energy spending: $4,792
Residential natural gas price: $9.76 per thousand cubic foot
Residential electricity price: 9.36 cents per kWh
See also
Energy on the ballot
Statewide fracking on the ballot
Local fracking on the ballot
Policypedia
Policypedia Energy logo.jpg
Energy Policy Project
Energy policy in the United States
Energy use in the United States
Energy terms and definitions
Energy policy in West Virginia
Fracking in West Virginia

Energy policy in West Virginia depends on geography, natural energy resources, how electricity is generated, how much energy consumers use, politics and the influence of groups such as environmental and industry organizations. Decisions by policymakers, such as state and local governments, utilities and regulatory agencies, affect all citizens economically and environmentally, and are generally geared toward providing reliable, affordable energy. The cost of energy affects not only home heating and electricity bills, and thus disposable income, but also economic growth, including jobs, investment and the cost of doing business in the state.

How energy is produced and consumed also has an impact on the environment and pollution. Energy policy in West Virginia has tried to balance alternative and renewable energy with economic development. Only recently has West Virginia began taking steps towards a more renewable energy-focused future. As the infrastructure for producing and delivering renewable energy sources is not as advanced as it is for energy generation from traditional sources, these policies often require subsidies to make the produced energy affordable, and their effects are difficult to measure.

Energy policy involves tradeoffs between providing an affordable, consistent energy supply on the one hand, and limiting pollution and protecting the environment, on the other. How states attempt to balance these two differs between states, and often boils down to costs to consumers versus costs to the environment. This article provides general energy information about the state as the context within which energy policy is made, as well as information about major legislation and public and private groups that play a role in setting energy policy in the state.

See also: Energy policy in the United States for more information on energy policy.
See also: Fracking in West Virginia

Energy overview

State facts

Below are quick facts about West Virginia’s energy climate.

West Virginia

In West Virginia

  • households consume about 25 percent more energy than the U.S. average, and spend 7 percent more on energy than the U.S. average.
  • 96 percent of the electricity consumed comes from coal.
  • natural gas is the main source of energy used in home heating for 40 percent of the state.
  • renewable energy sources made up less than 5 percent of net energy generation in 2013.
  • industry is the largest energy-consuming sector in the state.[4]

Available energy resources

West Virginia has abundant traditional energy resources including oil, coal and natural gas. Most of the coal is found in the southern and eastern regions of the state, though 43 of West Virginia's counties contain coal deposits. West Virginia also imports small amounts of coal from Illinois, Kentucky and Wyoming. Natural gas is found in the Marcellus and Utica shales in the northern panhandle, which are beginning to outproduce other natural wells in the region. Until recently, petroleum has been produced by small mines that could produce around ten barrels of oil per day. Recently, oil has been discovered in the Marcellus shale.[4]

West Virginia has renewable energy resources which contribute less than 5 percent of the energy for electricity according to the U.S. Energy Information Administration (EIA). Hydroelectric energy is the most abundant, while use of wind power is increasing in the northeastern portion of the state. Combined, both sources account for around four percent of total generation.[4]

Consumption and prices

Energy consumption in West Virginia
WV energy consumption chart.png

Legend[5]
     Transportation       Residential     Industrial       Commercial
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As shown on the pie chart in 2011, roughly 38 percent of West Virginia’s energy use was for industry, 23 percent for transportation, and another 23 percent for residential use. The final 15 percent was used for commercial purposes. Most of the energy used in the state is in the form of electricity, used primarily for industry, residential and commercial purposes, followed by coal and natural gas. Gasoline, used in transportation, accounted for 55 percent of the petroleum consumed in the state in 2011.[4] Generally the price of gasoline in the state tracks closely to the national average.[6][7] According to the U.S. Energy Information Administration's (EIA) February 2014 report, the federal excise tax is 18.40 cents per gallon of gasoline and 24.40 cents per gallon of diesel fuel. In addition to that, West Virginia collects a total tax of 34.7 cents on every gallon of gasoline, gasohol diesel fuel, which ranks it at the 11th highest in the United States.[8][9]

Comparisons tables

See also: State Energy Rankings to compare all 50 states

The table below compares West Virginia’s consumption and spending for energy, as well as prices for gas and electricity, and carbon emissions to those of Arkansas, which has similar population, resources and consumption needs because of climate and geography. Also given are the U.S. averages and the state rankings. All rankings are from highest to lowest, so, for example:

  • West Virginia’s rank of 21st in carbon emissions means that carbon emissions are higher in West Virginia than in Arkansas, which has a ranking of 31st.
  • Per capita income in Arkansas is lower than the national average, and slightly higher than in West Virginia, which at 48th ranks two places behind Arkansas’s ranking of 46th in per capita income.
  • These two states are very similarly placed in the lower half on population, overall consumption and overall spending.
  • Per capita energy consumption in West Virginia (at 16th) is similar to Arkansas (at 17th).
  • Per capita energy spending in West Virginia is also similar, ranking 20th to Arkansas’s ranking of 21st. This may be a result of the energy intensive industries of both states. West Virginia produces chemicals, primary metal and lumber while Arkansas's industry is based in agriculture and paper production.

The price for natural gas in Arkansas (ranked 21st) is somewhat higher than in West Virginia (29th) despite massive growth in Arkansas natural gas production in the last decade. Both states have infrastructure including pipelines that feed their respective regions and are net exporters of natural gas. The difference may be due to the more extreme climate demands in Arkansas or due to differences in the severance taxes on natural gas.[10][11]

Consumption and Expenditures Comparisons Summary
Type West VirginiaArkansasU.S. Figures
FigureU.S. Rank*FigureU.S. Rank*Totals
Population1.9 million373 million32313.9 million
Per Capita Income Average$34,47748$34,72346$42,693
Total Consumption724 trillion BTU361,117 trillion BTU3197,301 quadrillion BTU
Per Capita Energy Consumption390 million BTU16380 million BTU17312 million BTU
Total Spending on Energy$8,888 million37$14,047 million33$1,394,088 million
Per Capita Spending on Energy$4,79220$4,78021$4,474
Price of Residential Natural Gas, dollar per thousand cubic feet$9.7629$11.1021$12.48
Price of Electricity, cents per kWh9.36489.674412.31
Total Carbon Dioxide Emissions, million metric tons (2010)98.92166.1315,631
*Rank is from highest to lowest.

Homes are heated at an almost rate with either natural gas (found 41.4 percent of homes) and electricity (found in 42.4 percent of homes).[4]

Consumption of energy for heating homes in West Virginia
Source West Virginia 2011 U.S. average 2011
Natural gas 41.4% 49.5%
Fuel oil 3.3% 6.5%
Electricity 42.4% 35.4%
Liquid Petroleum Gases (LPG) 4.5% 5%
Other/none 8.4% 3.6%

Production and transmission

West Virginia produced 3,820.8 trillion BTU of energy in 2011. Of that 87 percent came from coal and just over 11.5 percent came from natural gas. The remaining 1.5 percent came from what the U.S. Energy Information Administration classifies as 'other,' which is "assumed to equal consumption of all renewable energies except biofuels."[12]

Energy production by type in West Virginia, 2011
Type Amount Generated
(trillion BTU)
% of State % of USA
Crude oil 12.4 0.32% 0.1%
Natural gas 442.4 11.58% 1.67%
Coal 3,321.1 86.92% 15.06%
Nuclear 0 0% 0%
Biofuels 0 0% 0%
Other 44.8 1.17% 0.63%

Electricity produced and consumed in West Virginia is primarily from coal, which produces about 87 percent of the total. Most of the coal used in electricity generation is produced in West Virginia, though some is imported by rail, barge and truck from Wyoming, Illinois, Kentucky and the rest of the appalachian region. Only about one-fifth of the coal produced in the state is used domestically. Almost all the coal mines in West Virginia are underground.[4]

Natural gas is accounts for around 11.5 percent of total production. The rest of the total energy produced in the state coming from renewable energy resources. Natural gas is produced from the Marcellus Shale found in the northern end of the state. It is estimated that West Virginia's reserves of natural gas could be 6 trillion cubic feet. Total proved natural gas reserves in the U.S. in 2011 were 334.067 trillion cubic feet.[13]

The state has over 4,000 miles of pipeline, making it an important hub for the region during winter months when homes need heating. Natural gas shipped from Ohio and Kentucky comes through West Virginia to Pennsylvania and Virginia. An important addition to the natural gas infrastructure of the state is the Appalachian-to-Texas Express Pipeline (ATEX), that will bring liquid natural gas from the Appalachian region to Texas for consumer plastics production.[14]

West Virginia produces very little electricity from renewable resources, production only comes from hydroelectric and wind resources. In total, hydroelectric and wind resources combined to produce just over 1 percent of the state's total energy production in 2011.[4]

Where electricity comes from in West Virginia[15]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 10,000 0.15% 0.03%
Natural gas-fired 5,000 0.08% 0%
Coal-fired 6,343,000 97.29% 0.37%
Hydroelectric 101,000 1.55% 0.03%
Other renewables 59,000 0.9% 0.03%
Total net electricity generation 6,520,000 100% 0.16%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

In West Virginia, there are eight privately owned and two municipal electric utilities regulated under the West Virginia Public Service Commission as of 2012. Two-thirds of the regulated electrical generation and a little less than half of the distribution are owned and operated by the Appalachian Power Company. There are 17 private gas utilities and no municipal utilities as of 2012.[16]

The Columbia Gas Transmission Company owns much of the liquid natural gas pipeline supporting the Appalachian region. There are several smaller companies such as Equitrans Inc., which also own pipeline in West Virginia and other surrounding states.[17]

Energy policy

Policy Issues
Energy policy in West Virginia has tried to balance alternative and renewable energy with economic development. Only recently has West Virginia began taking steps towards a more renewable energy-focused future.
See also: Fracking in West Virginia

Energy policy is made, executed and influenced by many organizations, both public and private, and is codified in the laws and regulations of the state. Each state’s energy policy involves tradeoffs in which energy production and prices are weighed against environmental concerns and efficiency. West Virginia adopted a renewable portfolio standard (RPS) through The Alternative and Renewable Energy Portfolio Act in 2009. The bill requires that by 2025, all utilities serving more than 30,000 residential customers produce 25 percent of their retail electricity from renewable or alternative sources. Utilities are required to comply in a series of stages. Between 2015 and 2019, all utilities need to produce 10 percent of their retail electricity from renewable sources, followed by 15 percent from 2020 to 2024, and finally 25 percent by 2025. Renewable and alternative energy credits are given through the West Virginia Public Service Commission to determine the amount of electricity sold from renewable sources. Utilities can meet the standard through credit trading.[18][19][20][21]

The American Council for an Energy Efficient Economy (ACEEE) is a non-profit organization dedicated to improving energy efficiency policy in the U.S. They focus on energy policy, research and outreach. Each year, they rank each state by their energy efficiency policies. In 2013, West Virginia ranked 46th in the United States.[22] There are differing estimates about the economic impact of renewable energy mandates in terms of costs that may affect prices and jobs, as well as the impact on the environment and pollution. Thus, for example, there are many new studies of what is called the "rebound effect" which refers to the fact that "some of the theoretically estimated gains in energy efficiency will be eroded as consumers consume additional goods and services."[23][24]

Major legislation

  • HB 103, The Alternative and Renewable Energy Portfolio Act (2009) requires investor-owned electric utilities with over 30,000 residential customers to produce 25 percent of retail electricity sales from alternative or renewable sources by 2025. The standard itself allows for flexibility. It has no minimum renewable energy requirement, which means that certain coal and natural gas technologies, which qualify under "alternative energy" in HB 103, could be used to meet that requirement. The West Virginia PSC allows for a credit trading system that allows utilities to buy renewable or alternative energy credits to meet the standard. S.B. 350 (2010) refined definitions in the bill related to recycled energy and ethanol production from corn.[25][26]
  • Senate Bill 185 (2013), "An Act Relating to alternative-fuel motor vehicles and qualified refueling infrastructure tax credits", gives a tax credit to taxpayers who buy a bi-fuel vehicle, which can use natural gas or propane. Vehicle conversion to a bi-fuel source is also accepted for the credit. The credit is worth 35 percent of the purchase price or 50 percent of the conversion cost of any vehicle. The dollar limit for is $7,500 for vehicles with a gross vehicle weight rating under 26,000 pounds, and $25,000 for vehicles with a rating over 26,000 pounds. The tax credit will expire in 2018. The bill also gives an income tax credit to eligible taxpayers who construct or purchase and install alternative fueling infrastructure.[27][28]
  • Under West Virginia Code § 11-6A-5a (2001), West Virginia offers a property tax incentive that lowers the property tax base on utility-owned wind turbines to as little as 24.95 percent of fair market value. This would effectively reduce property tax by up to 75 percent.[29]
Policypedia
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State energy policy

State fracking policy

Energy policy terms

Fracking in the U.S.

Energy use in the U.S.

Energy policy in the U.S.


See also
Local fracking on the ballot

Statewide fracking on the ballot

Government agencies and committees

  • The West Virginia Public Service Commission was originally commissioned as a railroad regulator in 1913. Since then, the commission has transformed into the utility regulatory body it is today. The commission "supervises and regulates the rates, services, operations and most other activities of all public utilities and many common and contract motor carriers passengers and property within West Virginia." There are three members of the PSC, all of them appointed by the governor with consent of the Senate.[32]
  • The West Virginia Department of Commerce Energy Division is responsible for formulating and implementing energy initiatives in the state. Their goals are to promote energy projects, attract energy enterprises and provide outreach and support. They work with support of the West Virginia Governor's Office and U.S. Department of Energy to host summits, fund initiatives and run energy programs.[33]

Major organizations

  • The West Virginia Environmental Council was organized in 1989 to influence legislation in the state that might have an environmental impact. Their mission "is to facilitate communication and cooperation among citizens in promoting environmental protection in West Virginia, to assist in organizing grassroots groups, to facilitate interaction among established environmental organizations and to correspond with all appropriate local, state and federal agencies involved in the management of West Virginia's environment." The council is made up of over 40 organizations, some of which are local and some that are chapters of larger, national organizations.[35]
  • The West Virginia Energy Users Group (WVUEG) is an association of energy-intensive industries in West Virginia, most of which provide some sort of manufacturing. WVUEG tries to lower energy costs to increase competitive advantage. They work through litigation and investigations before the West Virginia PSC.[36][37]
  • The National Research Center for Coal and Clean Energy (NRCCE) is run out of West Virginia University. They act as a research center and information clearinghouse devoted to securing the nation's energy needs and protecting the environment. Funding for their research and programs comes from both state and federal government as well as private donations. They research better technology for cleaner fossil fuel generation as well as land reclamation, waste management and other environmental issues.[38]

In the news

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See also

External links

References

  1. West Virginia Department of Commerce, "West Virginia Division of Energy," accessed March 4, 2014
  2. These figures come from the U.S. Energy Information Administration's (EIA) State Profiles and Energy Estimates, West Virginia Overview. Statistics for population and per capita income are for the year 2012; consumption and spending estimates are for 2011; and prices are for October 2013. Updated pricing information is available on the state's EIA profile. Prices will be updated on this page biannually.
  3. U.S. Energy Information Administration, "West Virginia Overview," accessed February 14, 2014
  4. 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 U.S. Energy Information Administration, "West Virginia Profile Analysis," December 18, 2013
  5. This chart depicts the state's energy consumption as reported by the EIA for 2011. Click the image to enlarge.
  6. Gas Buddy, “Historical Gas Charts,” accessed March 4, 2014
  7. To compare current gasoline prices in West Virginia to the U.S averages, go to GasBuddy.com
  8. U.S. Energy Information Administration, "Petroleum Marketing Monthly," February 2014, accessed February 14, 2014
  9. The Tax Foundation, "State Gasoline Tax Rates, 2009-2013," March 21, 2013
  10. U.S. Energy Information Administration, Arkansas Profile Analysis, December 18, 2013, accessed March 3, 2014
  11. National Conference of State Legislatures, "Oil and Gas Severance Taxes: States Work to Alleviate Fiscal Pressures Amid the Natural Gas Boom," accessed March 4, 2014
  12. U.S. Energy Information Administration, “State Energy Data System, Production,” accessed February 18, 2014
  13. U.S. Energy Information Administration, “Dry Natural Gas Proved Reserves,” accessed February 18, 2014
  14. Enterprise Products Partners L.P., "Home," accessed March 4, 2014 (timed out)
  15. These figures come from the EIA State Profiles and Energy Estimates U.S. Energy Information Administration, "West Virginia Overview," accessed February 5, 2014
  16. [c.state.wv.us/AnnualStatRpts/anstatrpt2012.pdf West Virginia Public Service Commission, "A Statistical Report," accessed March 4, 2014]
  17. U.S. Energy Information Administration, "Natural Gas Pipelines in the Northeast Region," accessed March 4, 2014
  18. U.S. Department of Energy, "Alternative and Renewable Energy Portfolio Standard," accessed March 4, 2014
  19. According to a report called "The Status of Renewable Electricity Mandates in the States," by the free-market Institute for Energy Research, the cost of electricity in states with RPS were on average 38 percent higher in 2010 than in states without a RPS.
  20. Institute for Energy Research, "The Status of Renewable Electricity Mandates in the States," accessed March 24, 2014
  21. Manhattan Institute, "The High Cost of Renewable-Energy Mandates," February 2012
  22. American Council for an Energy Efficient Economy, "West Virginia Utility Policies," accessed March 4, 2014
  23. International Risk Governance Council, "The Rebound Effect: Implications of Consumer Behavior for Robust Energy Policies," accessed March 3, 2014
  24. Scientific American, "How Bad Is the Rebound from Energy Efficiency Efforts?," May 21, 2013, accessed March 3, 2014
  25. U.S. Department of Energy, "Alternative and Renewable Energy Portfolio Standard," accessed March 4, 2014
  26. Institute for Energy Research, "West Virginia," accessed March 17, 2014
  27. U.S Department of Energy, "West Virginia Laws and Incentives for Tax Incentives," accessed March 4, 2014
  28. West Virginia Legislature, "Bill Status - 2013 Regular Session," accessed March 17, 2014
  29. U.S Department of Energy, "Special Assessment for Wind Energy Systems," accessed March 4, 2014
  30. West Virginia State Legislature, "House of Delegates Energy Committee," accessed March 4, 2014
  31. West Virginia State Legislature, "Senate Energy, Industry and Mining Committee," accessed March 4, 2014
  32. West Virginia Public Service Commission, "Commission History," accessed March 4, 2014
  33. West Virginia Department of Commerce, "West Virginia Division of Energy," accessed March 4, 2014
  34. West Virginia Encyclopedia.org, "Division of natural resources," June 7, 2011
  35. West Virginia Environmental Council, "The West Virginia Environmental Council An Effective Voice at the Legislature Since 1989," accessed March 4, 2014
  36. Spillman, Thomas & Battle Attorney's at Law, "West Virginia Energy User's Group," accessed March 4, 2014
  37. National Research Center for Coal and Clean Energy, "West Virginia Energy Users Group WVU-IOF Annual Meeting Nov 9, 2006," accessed March 4, 2014
  38. National Research Center for Coal and Clean Energy, "About the NRCCE," accessed March 4, 2014