An energy expert sensed artificial intelligence bubble trouble at a West Virginia Public Service Commission hearing the body held in Charleston last week on a proposal by FirstEnergy to build a $2.47 billion, 1,200-megawatt gas plant in Monongalia County supported by a new 2.3% annual rate hike, driven by the company’s anticipation of a 1,012-megawatt data center project yet to finalize a construction contract with the utility.
- By Mike Tony mtony@hdmediallc.com
- 9 min to read
“If [utilities] can’t get the tenants that they think they're going to be able to get or the tenants go bankrupt, I think there's a tremendous amount of uncertainty, given the amount of investment that's pouring into the sector right now,” Cathy Kunkel, a consultant with the Institute for Energy Economics and Financial Analysis, a Valley City, Ohio-based energy market analysis firm, testified. “I really question whether that's going to be sustainable over the long term, so I do think we are we run the rest of being in an AI bubble, so to speak, and that we could end up with a lot of surplus data center capacity and potentially electrical infrastructure capacity that ends up being stranded.”
Kunkel was testifying as a witness for the West Virginia Citizen Action Group, Solar United Neighbors, and Energy Efficiency West Virginia, intervening as one party in the FirstEnergy case.
But PSC Chairman Charlotte Lane, the commissioner who had asked Kunkel what she thought of what the chairman called the data center “phenomenon,” already had formed her own opinion on how West Virginia’s energy landscape should proceed regarding data centers. In a February 2025 column published on the PSC’s website, Lane wrote the PSC was “doing its bit to keep those centers in operation by ensuring a constant and reliable source of energy through the burning of coal.”
Just a month later, the West Virginia Legislature green-lit more of that "bit" by passing House Bill 2014, legislation that has drawn the ire of community residents and advocates throughout the state by removing local zoning and other regulatory control over data center projects and shielding developers from having to share critical information about their projects publicly.
But HB 2014 went further.
The law requires utilities to maintain their generating units to be able to self-generate power and achieve at least a 69% capacity factor — a measure of how often a plant runs at full capacity.
Although a 69% capacity factor isn’t required if doing so would increase electric charges above an established rate, energy experts, ratepayer allies and even Appalachian Power representatives have said a 69% capacity factor target set by the PSC for West Virginia’s coal-fired plants in recent years has encouraged uneconomic use of the plants that cost utility customers.
The PSC’s Consumer Advocate Division, an independent arm of the agency charged with representing residential ratepayers, provided evidence suggesting that use has been uneconomic in a July 2 case filing.
The filing authored by Consumer Advocate Division witness and coal procurement expert Emily Medine, consultant with Energy Ventures Analysis, Inc., showed precipitous drops below a 69% capacity factor among the three coal-fired power plants controlled by American Electric Power.
AEP subsidiary Appalachian Power’s John E. Amos and Mountaineer coal-fired plants dropped in capacity factors from 51% and 73% in 2012 to 37% and 41% in 2024, respectively, while the Wheeling Power-co-operated Mitchell plant capacity factor tumbled from 59% to 30%.
Medine found Appalachian Power and Wheeling Power coal stockpile inventory levels “particularly concerning” since they come close to physical capacity limits noted in the companies’ testimony.
West Virginia has been an outlier in its enduring reliance on coal-fired power as other states shift to lower-cost renewable and gas resources.
Kunkel testified in another case last year that Appalachian Power and Wheeling Power incurred more than $150 million of operating losses over a two-year period from uneconomic operation of their coal units, entering into new coal contracts despite already high coal inventories.
Ratepayer advocates in the FirstEnergy gas plant case have urged adoption of a company large load tariff, a tool which may include special contracts, rates and service pacts between utilities and large-demand customers.
RMI, a Colorado-based clean energy consulting firm, has called for such tariffs to include ratepayer protections to reduce risk to customers if demand fails to materialize or come online more rapidly than expected, through contract minimums, term lengths, collateral, demand ramps, exit fees and other measures.
But FirstEnergy has rejected the calls for a large load tariff, instead proposing a special contract-by-special contract approach to data center developers that Christian Beam, president of FirstEnergy’s West Virginia and Maryland operations, testified last week argued was better than what he called a “one-size-fits-all” approach.
New Jersey Gov. Mikie Sherrill, a Democrat, this month signed into law legislation that requires utilities to file large load tariffs mandating that customers of 50 megawatts or more provide ratepayer protections sought by the state Board of Public Utilities, with tariffs required to incentivize data centers to develop and use methods to increase energy efficiency and guard against public customers “paying stranded costs.”
New York Gov. Kathy Hochul, another Democrat, this month issued an executive order imposing a one-year moratorium on new large-scale data center development.
'We were the guys that basically wrote the bill'
But West Virginia has aimed to usher in data center development through HB 2014, which was requested by Gov. Patrick Morrisey, a Republican.
HB 2014’s wipeout of local say in approval of data center projects has drawn criticism from community advocates from throughout the state, but especially in Tucker County, where residents have widely opposed a data center complex project planned by Purcellville, Virginia-based Fundamental Data.
Fundamental Data representatives have been quiet about their plans for the data center complex project, which local leaders said took them by surprise upon the company’s March 2025 application to the West Virginia Department of Environmental Protection for an air quality permit the DEP granted five months later.
But belying Fundamental Data’s image among project critics as a distressingly mysterious outsider in an even more potentially troubling light this month was an appearance by self-identified company engineer Ted McGavran at a City of Belmont, North Carolina, Council meeting.
At the July 6 meeting, McGavran gave his perspective on “this data center world” to aid officials bracing for data center development in or around Belmont, where he lives, according to his Facebook page.
“We were the guys that basically wrote the bill and got it through the Legislature in 2024 and early 2025,” McGavran said of HB 2014, which he said allows the company to “set out the rules for what’s called a microgrid,” adding that “it’s really a macrogrid, as big as it’s going to be.”
A microgrid is a localized power grid that can operate independently to produce electricity.
HB 2014 prohibits counties and municipalities from enforcing or adopting ordinances, rules or regulations that limit creation, development or operation of any certified microgrid district or “high-impact” data center project, a category for projects to house and operate data-processing equipment that have a power capacity of at least 90 megawatts for their computing equipment.
HB 2014 eliminated a requirement that electrical service to business development districts be generated from renewable sources and removed a limit on such districts from a 2022 law designed to facilitate development of microgrids. The 2022 law, Senate Bill 4001, established a Department (now Division) of Economic Developm