An example of a 200 megawatt gas-fired electric generation facility (photo courtesy MAN Energy Solutions).
“The single biggest economic development bill in the state in a very long time,” said Governor Patrick Morrisey earlier today about HB 2014, legislation that sets up a new regulatory, energy, and tax framework to attract data centers to the Mountain State.
Data centers are facilities that house computer systems and related supprt components such as cooling systems, power supplies, and security controls. Data centers dot the landscape in nearby Loudoun County, Virginia, which has almost 200 data centers and more than 100 in the pipeline.
Driven by the growth in artificial intelligence and other computing needs, data center demand is expected to stay high. This creates an opportunity for West Virginia to compete to become the “state that is the easiest to operate a data center in,” according to Morrisey. HB 2014, which passed the House of Delegates on April 1 and is awaiting action in the Senate, is the Governor’s answer to how West Virginia can compete to become a data center hub. However, some provisions in the bill are causing concern among local government officials and residents.
HB 2014’s key provisions include:
- “Certified Microgrids” Exempt from Usual Regulations. Data centers use a great deal of energy, so HB 2014 streamlines new power production serving a new data center by exemption such production from the usual Public Service Commission requirements and rates.
- New “Data Economy Liaison” for Data Centers. A new Charleston office under the Department of Commerce will act as the “single point of contact” for data center and associated energy facilities to help coordinate and expedite siting, permitting, licensing, and similar activities.
- Ban on Local Government Exercise of Powers. Section 5B-2-21b strips county and municipal governments from exercising their usual authorities when it comes to data centers in this program and related energy installations called “microgrids.” For example, section 5B-2-21b(c) prohibits local governments “whether by ordinance, resolution, administrative act, or otherwise, from enacting, adopting, implementing, or enforcing ordinances, regulations, or rules which limit, in any way, the creation of, and acquisition, construction, equipping, development, expansion, and operation of any certified microgrid district or certified high impact data center project[.]” Other sections explicitly ban local governments from taking action on zoning, land use, horticultural, noise, viewshed, lighting, and building code inspections and enforcement.
- State to Take Incremental Property Tax Revenues. HB 2014 would pull into Charleston – instead of the county or municipality in which the data center facility is located – the incremental property taxes generated by such new developments. Such tax revenues can be substantial. For example, in Loudon County, data center property taxes fund a majority of that county government’s operating budget. Under HB 2014, the new tax revenues would be allocated among six state funds, including 55% to a new Personal Income Tax Reduction Fund; 10% to a new Economic Development fund; and 10% to a new Electric Grid Stabilization and Security Fund.
The Governor has not made it clear using local data center property taxes to help fund state income tax reduction will help West Virginia attract data centers and employees.
HB 2014 was referred to the Senate Economic Development Committee. With the legislative session coming at the end of the week, the fate of this bill is uncertain.
By Harriet Pearson, Staff Contributor