by Mike Oliverio
Affordable electricity is critical to West Virginia’s economic future. Whether it’s a futuristic hyperloop facility, advanced manufacturing or new data center, they all require significant amounts of reliable electricity at an affordable price. Coupled with available land, West Virginia has key advantages going forward — but only if power rates within our regional grid are competitive to keep prices down.
West Virginia is part of the PJM grid (which originally indicated “Pennsylvania Jersey Maryland”). PJM, one of nine Regional Transmission Organizations, now includes all or part of 13 states and Washington, D.C. West Virginia is completely within PJM. Within PJM, power is competitively traded, and the entire system is overseen by the Federal Energy Regulatory Commission.
Wholesale generators are independent power sources not owned by utilities. They make up a large share of the power produced for PJM, and they sell it “wholesale” to end users, including utilities and large power consumers that buy direct in states that allow it.
Competitive wholesale generators are agnostic to fuel sources. Unlike older, utility-based power generators, which often have a guaranteed rate of return by law (paid by electric ratepayers), the value for wholesale generators that sell to the grid is in producing cost-efficient power for the market to make a profit.
The National Energy Technology Laboratory in Morgantown has advanced both natural gas and clean coal as a crucial part of our energy base. Their important work has helped make the wholesale power market more competitive — which has led to lower costs and reduced emissions.
Additionally, renewable sources have become cost effective because of the free energy they collect and use, while the costs of solar panels have decreased 90% over the last few years and wind turbines have also become cost efficient.
The competitive market system used in the PJM has an added benefit in that power generators must be ready to deliver the power they promise, or they must pay for it themselves from others to meet the demand. This dynamic has created a stable, reliable power system for our region while keeping overall prices down over time. This is why it’s so important elected leaders like Sens. Capito and Manchin be appreciated for their efforts to ensure that FERC continues to prioritize both reliability and competition.
Competitive wholesale power is nothing new. West Virginia has had independent power producers for decades, including from coal, gas and wind. As older power plants come to the end of their useful life, West Virginia and the PJM will continue to see the need for additional competitive wholesale power generation to come online. Meanwhile, technology has become more efficient at all levels over that time — and significantly cleaner.
While the obvious cost benefits to consumers have been found through competitive power, what is lesser known is how much it’s also helped the environment. According to PJM, “between 2005 and 2020 … emission rates for nitrogen oxides are down 86% and sulfur dioxide 95%.”
From 2019 to 2020, the average emission rates for carbon dioxide, nitrogen oxides and sulfur dioxide, measured in pounds per megawatt hour, declined in the PJM footprint. The carbon dioxide emission rate dropped 7%, nitrogen oxides emissions dropped 20% and the sulfur dioxide emissions dropped nearly 22%. These environmental efficiencies are the result of newer and cleaner power sources and technologies replacing old, less efficient units.
A recent Energy Choice Coalition report by University of Texas Professor Josh Rhodes found that competitive regions have reduced their power sector CO2 emissions by about 35% from 2005 levels. Regions without competitive wholesale generation only reduced power-sector CO2 emissions by about 27% over the same period. The PJM had even more CO2 reductions — 41% since 2005.
West Virginia needs to be a well-informed energy state. As power customers better understand how the grid works and how electricity flows in a competitive power market across state borders, our elected leaders can ensure we continue to have reliable, affordable power to attract new business and create the jobs our state needs in the future.
Mike Oliverio served in the West Virginia State Senate representing Monongalia and Marion counties from 1994 until 2010.
