Community Bulletin
Hank Ellis Insurance Agency in Buckhannon is urging drivers to ask about an auto insurance rate lock — a way to hold a rate steady as premiums climb. The independent Erie agency, owner-operated since 2006, writes auto, home, life and commercial coverage. Read more →
This story brought to you paywall-free, courtesy of the My Buckhannon team and our community partners
By Sarah Elbeshbishi, Mountain State Spotlight
This story was originally published by Mountain State Spotlight. Get stories like this delivered to your email inbox once a week; sign up for the free newsletter at mountainstatespotlight.org/newsletter
For decades, West Virginia was home to some of the lowest power rates in the country, but in recent years those costs have rapidly increased.
The state’s continued reliance on coal, even as cheaper alternative energy sources have emerged, has contributed to the soaring electricity prices facing West Virginians. And the state’s declining population has exacerbated those increased costs.
Now, data centers are adding to the problem.
The latest explosion of artificial intelligence and data centers is expected to significantly increase the need for energy for the next several decades.
But as straining power grids try to meet the new level of demand, they’re offsetting associated costs onto all of their customers, including West Virginians.
Although West Virginia isn’t yet home to any major data center development, because the state shares the same power grid as a dozen other states, West Virginians are footing power costs associated with meeting the energy demand driven by Data Center Alley in northern Virginia.
This could get worse if new data centers in the region tie into the power grid, regardless of whether they’re in West Virginia.
Predicted demand for electricity outpaces supply
West Virginia is part of a regional grid run by PJM Interconnection, which operates the electric grid and plans the movement of electricity to meet demand across 13 states in the Mid-Atlantic region.
PJM forecasts how much electricity is needed, so it tries to secure enough generation from sources like power plants, solar farms and wind turbines.
Over the last few years, the rise of artificial intelligence and data centers has substantially increased the demand for energy. As a result PJM has forecasted larger amounts of energy to meet peak energy demand.
But while the demand has surged, the supply of power generation hasn’t. And since the supply hasn’t kept pace with demand, energy resources are much more limited than in previous years, causing costs to increase.
Last year, the cost to secure enough power supply was $2.2 billion. But for this year, that cost rose to $14.7 billion. Those costs are spread across the entire grid, which is why ratepayers are beginning to feel that increase.
This doesn’t impact the roughly 460,000 residents who are serviced by Appalachian Power and Wheeling Power because their parent company owns enough power generation to meet their customers’ demands.
Data center energy demand increases other costs
In addition to needing more energy, data centers also need more electrical infrastructure. Such upgrades and improvements to the grid system are an expense typically paid for by PJM customers.
Currently, there are two proposed transmission lines to address the growing electricity demand in the northern Virginia region, which is known as Data Center Alley. Both lines are proposed to cut through West Virginia, which has drawn fierce opposition from communities on the routes.
Because of the way PJM determines the costs of infrastructure projects, all ratepayers will be on the hook for paying for these two lines. In fact, the Institute for Energy Economics and Financial Analysis found that the two transmission lines would cost West Virginians more than $440 million over the next 40 years.
The energy research nonprofit and other groups urged PJM to reform how it determines who pays for infrastructure projects to prevent ratepayers from bearing costs caused by data centers.
“One of the principles of electric rate regulation is that the entity that’s imposing cost on the system bear those costs to the extent possible,” said Cathy Kunkel, an energy consultant at IEEFA.
“Obviously, that is complicated in practice, but the historical way transmission cost allocation has been done is just not keeping up with that principle when it comes to data centers,” she added.
The sudden increase in energy demand has also increased the cost of fuel, which is also driving up power bills across PJM and West Virginia.
Reach reporter Sarah Elbeshbishi at sarah@mountainstatespotlight.org
