MORGANTOWN — In December 2020, the Monongalia County Commission finalized 30-year payment in lieu of taxes (PILT) agreements with subsidiaries of Longview Power anticipated to generate $60.7 million for use within the county.
The agreements were tied to the construction of two projects – a 1,200 MW combined cycle gas-powered plant and 500-kilovolt transmission line on roughly 54 acres near Longview’s existing coal-fired power plant, in Maidsville; and a 70-megawatt solar array split between 127 acres near the existing plant and 50 acres in Pennsylvania.
Neither project has been built or even financed to this point and it sounds as if the details of the solar project remain very much in flux.
This week, the commission extended the deadline on its agreements with Mountain State Clean Energy (natural gas) and Mountain State Renewables (solar). Under the extensions, the agreements become void if financing for the projects is not finalized by Jan. 1, 2023 or five years after the West Virginia Public Service Commission issues final orders approving the projects – whichever comes first.
“It was anticipated that the financing would be completed in a five-year period. Well, we’re running up on that date. We have been in conversations with Mountain State; I have on behalf of the commission, and they are anticipating that financing is eminent and would be completed sometime shortly. Hopefully within the next year or so,” Commission President Sean Sikora said, adding, “Just to avoid any misunderstanding, it was agreed we should extend those just in case.”
Earlier this month, Longview’s daughter companies asked the West Virginia Public Service Commission for four-year extensions on the citing certificates granted for the projects.
The companies cited several reasons for the delays in those filings, including weak capacity prices, volatile energy prices following COVID and the instability brought on by the Ukraine war.
The companies also pointed to procurement and supply chain issues, inflation and uncertainty about environmental regulations for gas-fired projects.
“As you can imagine, the current administration was very much against fossil energy and as a result of that, with a lot more of the coal-fired power plants being closed, this gas-fired power plant is more needed than ever. The gas is definitely going through. The solar, there may be better credits on the Pennsylvania side, so that’s always been a football going back and forth,” Sikora said. “The gas-fired power plant is what they’re planning on going forward with. It looks like there is need and the outlook is a lot more positive.”
The agreements signed in 2020 were the result of more than 18 months of negotiations between the commission, Longview and the Monongalia County Board of Education.
The result of those negotiations was $60.7 million to the county paid out over 30 years, including $3.1 million in PILT payments and $58,222,516 in lease payments.
The PILT/lease ratio was structured to get around the state holding PILT payments against school districts when calculating school aid formula.
This was a lesson hard learned.
The 40-year agreement signed in 2003 that resulted in Longview’s $2.2 billion coal-fired power plant is worth $106 million – $103 million in PILT payments and $3 million in lease payments.
It quickly became clear that about 85% of the PILT dollars going toward the school district’s general levy was counting against the district’s state aid.
“So the way we did it this time, we flipped that ratio. We did about 3% on the PILT and the rest is on the lease,” Sikora said at the time. “So, by flipping those ratios, that leaves about $20 million more that’s going to be staying in the county, big C, so that we can use it here locally rather than pay it into the state.”
Included in the original approvals was a resolution stating a material portion of any lease payments generated would be allocated “to a vehicle that will seek to ensure the BOE’s needs and projects receive all due consideration for use of such funds.” It also states, “The BOE will have a significant voice in any ultimate choices.”
On Thursday, Sikora told The Dominion Post it remains to be seen if and how the solar project will play out, but noted it’s feasible Mountain State Renewables could seek to renegotiate its agreements with the county if the scope of the project is altered.
