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Examining the competitiveness of industrial electricity rates

OVERVIEW

West Virginia scores well on important factors like social and community engagement and a business-friendly environment. The state has long touted the low cost of doing business as an advantage to retain, grow and attract industries large and small. As an example, historically, West Virginia has consistently remained competitive among neighboring states on industrial electricity costs, which has been a prominent selling point for business attraction. However, as several surrounding states begin taking a closer look at how to contain their electricity rates, West Virginia must also examine past, current and future trends to ensure it remains competitive in the future.

WV Forward partners have a responsibility to both West Virginia families and businesses to help the state stay competitive, and continue to be a great place to live, raise a family and do business – now and in the future.

West Virginia in a Lightbulb

examples of wv forward in action

These are complex issues with many perspectives, stakeholder interests and require potentially multifaceted solutions. But West Virginians can also agree that whether it is lighting up our homes or harnessing energy for production, electricity is a necessity.

Because the WV Forward blueprint identifies recent trends in industrial electricity costs to be on a competitive decline, experts and stakeholders are coming together to facilitate an informative, data-driven analysis of potential actions to ensure West Virginia maintains a competitive advantage in the future. By employing a non-partisan, data-driven and inclusive approach, it is important to ask if our state is competitive now and what future rate trends predict. What are the actions West Virginia may consider to out-pace competitors vying for business growth? How can we keep the cost of doing business low and keep our communities and families strong?

WV Forward partners will also look into the recent developments in the governance of the Federal Energy Regulatory Commission (FERC) over the PJM ISO and the implications on the West Virginia energy market, especially as it pertains to PJM’s Reliability Pricing Model and its annual 3-year ahead capacity auction. WV Forward will also examine the increasing role of renewable energy in the national and glo bal power mix and recent trends in greater preference for green energy by some sectors/ industries (e.g., technology companies).

West Virginia by the Numbers

From 2008 to 2017, industrial electricity rates in West Virginia have risen 5.6 percent per year in contrast with 0.8 percent across the United States (See table 1) (SOURCE: Energy Information Administration). Table 2 shows the percentage change in industrial electricity rates in West Virginia, the United States, and a few select states from 2007 to 2017 in five-year intervals (SOURCE: Energy Information Administration).

Industrial electricity rates: West Virginia versus U.S. Average. See Table form below for exact data. 
National rates are steady and mostly consistent, tethering around 6 and 7, while West Virginia's started low in 2007 at 4, but rose to match the national rate in 2017    
Table 2A: Industrial Electricity Rates: West Virginia vs. U.S. Average. Cents per Kilowatt-hour.
-Source: Energy Information Administration
Year United States Percentage Change West Virginia Percentage Change
2007 6.39 - 3.95 -
2008 6.96 8.9% 4.20 6.3%
2009 6.83 -1.9%
5.24 24.8%
2010 6. 77 0.9%
5.86 11.8%
2011 6.82 0.7%
6.18 5.5%
2012 6.67 -2.2%
6.33 2.4%
2013 6.89 3.3%
6.20 -2.1%
2014 7.10 3.0%
5.87 -5.3
2015 6.91 -2.7%
6.09 3.7%
2016 6.76 -2.2%
6.57 7.9%
2017 6.88 1.8%
6.64 1.1%
Average Percentage Change - 0.8%
- 5.6%
Industrial electricity rates bar graph.
Electricity rate comparison of the following states and West Virginia: Louisiana, Kentucky, Georgia, Arkansas, Tennessee, South Carolina, Mississippi, Alabama, Virginia, Ohio, Pennsylvania and Maryland. Shows that the rates are consistent. 
Table 2B: Industrial Electricity Rates: West Virginia and Select States. Cents per Kilowatt-hour.
-Source: Energy Information Administration.
States 2007 2012 2017 Average Percentage Change
Lousiana 6.77 4.76 5.42 -7.92%
Texas 7.79 5.57 5.49 -14.97%
Kentucky 4.47 5.35 5.58 11.99%
Georgia 5.53 5.98 5.82 2.73%
Arkansas 5.25 5.76 5.93 6.33%
Tennessee 5.19 7.08 6.03 10.79%
South Carolina 4.83 6.02 6.09 12.90%
North Carolina 5.47 6.42 6.11 6.27%
Mississippi 5.75 6.24 6.12 3.30%
Alabama 5.27 6.22 6.23 9.09%
West Virginia 3.95 6.33 6.64 32.58%
Virginia 5.07 6.72 6.67 15.90%
Ohio 5.76 6.24 6.69 7.77%
Pennsylvania 6.87 7.23 6.75 -0.70%
United States 6.39 6.67 6.91 3.99%
Maryland 9.41 8.09 8.32 -5.59%

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*Citations available upon request.