Grant Town has long had financial difficulties.
The power plant has lost $ 117 million in the past five years, so submitted documents with the West Virginia Public Service Commission.
Herb Thompson, the plant’s support services manager, admitted in a 2017 PSC filing that the company had just enough cash to pay its employees and cover fuel and operating costs. Its reserves were dry, and so was it couldn’t afford it to shutdown for maintenance or upgrades.
If new regulations forced Grant Town to cut its greenhouse gas emissions, it would take US $ 6-10 million to modernize its turbine, “which we just can’t afford right now,” the official said.
Now Grant Town wants to be bought out of its energy contract with Mon Power, a subsidiary of FirstEnergy Corp., so that it can operate cryptocurrency mining, which relies on high-performance computers, its owners announced in a PSC filing last Friday. The PSC filing did not identify who would buy the electricity, but there is a growing demand for electricity among cryptocurrency miners.
The proposal provides for another source of income to be created by selling ashes for concrete production.
There is a precedent for buying up similar electricity contracts. In 2019, Mon Power paid $ 60 million to a coal waste incinerator owned by Morgantown Energy Associates. This facility switched to burning natural gas, ended the use of drops and greatly reduced emissions.
Old mines, big piles
The fuel that Manchin’s family business Enersystems Grant Town provides comes from huge piles of rubbish that pile up outside two disused mines. Both are near Manchin’s hometown of Farmington. There’s the Barrackville dump outside of Pleasant Valley and the 7th Humphrey mine near Morgantown, according to public records. Grant Town was the sole recipient of all coal sold by Enersystems between 2008 and 2019. The Intercept reported.
Enersystems transports the substandard fuel from these locations to the Grant Town boilers, which power a steam turbine generator. It’s labor intensive and dirty. Grant Town, which has around 50 full-time employees, burns around 500,000 tons of scrap coal annually.
“Most of the cost of burning or using waste fuel comes from the carbon in the fuel. It’s really because of all of the high handling costs, high processing costs, ash disposal, the much higher ash content in the fuel and the associated ash disposal costs, “said an advisor to the facility’s owner, American Bituminous Power Partners, in 2017.” There are a lot of trucks -Transportation, a lot of transportation, a lot of processing at the power plant site, mixing different fuels to get a mix that you can see how a boiler can burn. “
In 2020, almost all of Grant Town’s coal burned came from Enersystems, according to the latest US Energy Information Administration records.
Manchin’s former chief of staff, Larry Puccio, has counted FirstEnergy among its lobbying clients since at least 2017, according to West Virginia lobbying disclosures first reported by Sludge. FirstEnergy is one of Manchin’s top donors according to OpenSecrets.org and has contributed $ 36,000 so far in the current election cycle.
Otherwise, Grant Town is pretty inconspicuous.
It’s a relic of the Public Utilities Regulatory Policy Act from the 1970s that encouraged higher energy efficiency and wider domestic energy promotion.
The coal operators found an inexpensive source of fuel nearby: the useless mixture of mud, coal, and shale dug from mines and piled in huge piles. Incineration of this waste was also an effective way of cleaning up former mines by removing pollutants that would otherwise end up in waterways. The ashes of the burnt drop were later spread in the same places to absorb the acid runoff.
Grant Town’s financial challenges are becoming more common; Every year, more and more coal-fired power plants across the country are being shut down. Plants in similar situations have pursued options like closing the plant, converting it to natural gas, selling energy directly to consumers, or operating Bitcoin mining.
American Bituminous Power Partners (AMBIT), the owner of Grant Town, has argued in PSC filings that continuing to operate under the power purchase agreement could drive up utility bills.
It is not uncommon for utilities and power plant owners to disagree over cost estimates. Experts say the battle between Grant Town and Mon Power, the FirstEnergy subsidiary, could be an ordinary contract battle.
Grant Town has been on the verge of bankruptcy for years. The facility is set to cost Mon Power customers nearly $ 24 million next year, according to Public Service Commission records.
In 2006, when Manchin was governor of West Virginia, state regulators helped save the facility by raising the price from $ 27.25 per megawatt to $ 34.25. Regulators also approved the extension of the power purchase agreement from 2028 to 2036. Puccio, then chief of staff at Manchin, helped negotiate a deal with Mon Power to keep the facility running. The Intercept reported.
‘Fight this fight’
Grant Town is the kind of factory many Democrats are hoping to shut down. According to EPA data, more than 10 million tons of greenhouse gases were released between 2010 and 2019.
Biden wants to reduce emissions from the electricity sector by 80 percent by 2030 and eliminate them five years later. Such a rapid transition will send shock waves through the country’s coal industry.
Enersystems, in whose establishment Manchin was involved in 1988, lists its business purpose according to “Surface and underground coal mining” submitted documents with the Secretary of State of West Virginia.
Grant Town says his plan to fuel cryptocurrency mining and reuse its ashes to make concrete will help cut carbon emissions.
“We’re going to start marketing the ash as a replacement for cement as a component of concrete, a great way to reduce greenhouse gas emissions,” Richard Halloran, president of Grant Town Holdings Corp., said at a recent PSC hearing. “While the success of these and other potential companies at Grant Town is uncertain, we will continue to invest in them to maximize our chances of staying in business for many years.”
If Mon Power doesn’t buy out the contract, the plant will pursue a stripped-down version of the cryptocurrency mining plan, although it won’t be able to perform the same upgrades and would be more vulnerable to future climate regulations.
“This will give us less protection from the antifossil fuel [coal] Sentiment, legislation and taxation, but we will try to fight this fight as hard as possible, “Halloran said in the PSC statement.
Ambit declined to comment.
For its part, Mon Power has not explained why it refuses to buy out the contract.
“Mon Power is carefully reviewing financial options such as contract purchases and will continue to investigate transactions that will bring economic benefits to its installment payers,” said Will Boye, spokesman for FirstEnergy.
Separately, FirstEnergy paid a $ 230 million fine last year after admitting she was funding dark money groups at the center of an Ohio bribery scandal involving the Republican House spokesman. Legislators helped pass laws that forced installment payers to prop up money-losing nuclear power plants.
Coal Power Policy
A number of considerations can be taken into account in a utility’s decisions about power purchase agreements, including grid reliability. Utilities say it’s not uncommon for asset owners and utilities to disagree about the cost of acquisitions. Recent PSC registrations show that the two sides are far apart when it comes to the price of contract termination.
Experts suggested to E&E News that Ambit may want to buy more money from the contract than Mon Power is willing to pay.
Regulators sometimes take local considerations into account when weighing whether to keep a power plant operational, said Neil Chatterjee, a former chairman of the Federal Energy Regulatory Commission.
“There are certain regions of the country where these plants support local communities, they are a major economic engine, they support the school system, they employ a lot of people, there are many direct and indirect jobs. And so there can be more effort in these communities to keep these plants up and running, there can be a lot of sunk costs, ”he said.