West Virginia still weighing tax on new power lines

West Virginia transmission line tax targets high-voltage electric transmission projects like PATH and TrAIL, raising $135M for counties, infrastructure, and rate relief, while sparking interstate commerce clause debates and Public Service Commission review timelines.

West Virginia lawmakers are unlikely to get any legal advice from the state Supreme Court as they consider Gov. Joe Manchin's proposed tax on new high-voltage power lines, a regulatory lawyer said.

Richard Hitt, counsel to the Public Service Commission, also told the interim Joint Finance Committee subpanel that his agency cannot delay its review of one of two potentially affected projects, part of broader billion-dollar transmission efforts under review, even though it recently bogged down in neighboring Maryland.

Manchin requested a bill this year to apply a state business tax on electric transmission lines that carry at least 450 kilovolts over at least 50 miles within the state. It failed during the regular session, but lawmakers are studying the proposal in advance of the 2010 session.

Administration officials argue that as introduced, Manchin's proposal would pass constitutional muster. But Delegate Nancy Guthrie suggested asking the state's high court whether the tax would violate the U.S. Constitution's protection of interstate commerce.

The Kanawha County Democrat questioned the logic of enacting the tax only to see a power company successfully sue to block it.

"Then the entire Legislature, both the House and the Senate, and the governor are going to look like a lot of dopes," Guthrie said. "I don't want to look like a dope. I really don't."

But Richard Hitt, counsel to the Public Service Commission, called it extremely unlikely that the state Supreme Court would weigh in before any legislation passes. As any lawsuit would focus on the commerce clause of the U.S. Constitution, it would likely end up in federal court.

Manchin pushed for the tax in the wake of objections from affected communities, amid a growing fight over power lines to a pair of proposed power line projects that would cross portions of West Virginia.

One, the Potomac-Appalachian Transmission Highline or PATH, is a power line plan that would carry 765 kilovolts across 285 miles to that state from an American Electric Power Co. power plant in south-central West Virginia.

Maryland regulators rejected the application to erect the $1.8 billion project's 20-mile segment there, saying it was improperly filed and raising questions about route choices that could affect approvals. PATH would also cross part of Virginia.

Delegate John Doyle, D-Jefferson, represents part of the affected West Virginia area. He questioned whether the Public Service Commission should wait to see what happens in Maryland.

Hitt's agency has scheduled a series of 11 public hearings on the PATH proposal, starting September 22 and 23 in Shepherdstown.

"There's a certificate filed with the commission," Hitt said. "Once it's filed, the clock is running and the Public Service Commission has a statutory obligation to take up that petition and act on it during the time period."

The applicants could request a delay, Hitt also noted.

Hitt's agency earlier approved the other project, a $1.3 billion bid to build a 500-kilovolt, 240-mile transmission line across north central West Virginia between Pennsylvania and Virginia.

Opponents of that proposed Trans-Allegheny Interstate Line, or TrAIL, argued before Virginia's Supreme Court in their challenge of the project in that state.

As proposed, Manchin's tax would reap around $135 million annually from both projects. Revenues would benefit host counties, a state infrastructure fund and electric retail customers statewide in the form of reduced billing rates. Besides the commerce clause concern, lawmakers have also questioned whether the tax would raise utility rates and how it relates to tax breaks for wind sought by utilities statewide, and whether passing the bill would amount to the Legislature endorsing the under-debate projects.

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