Manchin to Propose New Tax on Transmission Line

By Williams, Walt

CHARLESTON – Gov. Joe Manchin said he plans to pursue a tax on power transmission should either the federal government or the state’s Public Service Commission approve plans by Allegheny Energy to build a transmission line across northern West Virginia.

Manchin announced the tax May 23 in response to a Freedom of Information Act request by the Sierra Club of West Virginia.

“This is something I have been thinking about and discussing for some time, primarily because of the possibility of the federal government superseding any decision that may be made on the state level,” Manchin said in a news release.

Allegheny’s transmission subsidiary TrAILCo filed with the PSC last year for a certificate to build the 500-kilovolt Trans- Allegheny Interstate Line across Monongalia, Preston, Tucker, Grant, Hardy and Hampshire counties.

That same year, the Federal Energy Regulatory Commission issued an order interpreting the Energy Policy Act of 2005 to say that FERC had the power to issue a permit for construction of a new power line even if a state lawfully denied a site transmission application, according to the Governor’s Office.

“If the TrAIL line is approved, either by the PSC or the federal government, we will stand ready to make sure that our citizens aren’t taken advantage of and instead receive a benefit from its placement in West Virginia,” Manchin said.

The governor’s proposed plan comprises four components:

* rate reductions for West Virginia’s citizens so that they will pay less for the power they will receive from the line;

* extra revenue for the counties that house the line;

* extra revenue for the state to provide additional services;

* free electricity for all landowners who are affected by the placement of the line.

Allen Staggers, manager of corporate communications for Allegheny Energy, said the Governor’s Office had discussed the tax with company officials before Manchin made his announcement. He also said the tax would be targeted to only affect lines such as the one Allegheny Energy plans to build – for example, only taxing lines that transmit at least 500 kilovolts of electricity.

While he couldn’t comment on the specifics of the tax because no legislation had been drafted, Staggers said implementation of the tax wouldn’t change the company’s plans to build the transmission line.

“We would just look at this as a cost of doing business,” he said.

Allegheny Energy has run into vocal opposition in its pursuit to build the line. The Sierra Club is leading a campaign against it, saying the proposed line would result in the loss of wildlife habitat and a loss in the use of private property along the line’s route. The organization is proposing that the line either not be built, with the money used to build it instead invested in alternative energy, or have it relocated so it does not affect pristine wilderness areas.

However, the line was found necessary by regional grid manager PJM Interconnection in 2006 to prevent blackouts that it predicted would occur across the system as early as 2011. The line is meant to connect energy generators on the western side of the Appalachian Mountains with consumers on the eastern side.

PSC staff disagreed with the grid manager’s conclusions in a report issued in March, saying the threats of blackouts had been exaggerated and that the company had failed to show the new line was necessary to meet consumer demand.

As a result of opposition from PSC staff and other interest groups, Allegheny Energy has drafted a settlement agreement to try to alleviate the concerns of critics. Details of the settlement are scheduled to be released at a PSC public hearing May 30 in Charleston.

Copyright State Journal Corporation May 30, 2008

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