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Generation fuel diversity showing up in electric rates

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States in the region that have more diverse generation mixes are experiencing lower electricity rate increases.

West Virginia, least diverse of the group, is suffering the largest increases, according to new 2012 electricity industry data released Feb. 28 by the federal Energy Information Administration.

The data come as Public Service Commission of West Virginia weighs proposals from the state's major utilities, Mon Power and Appalachian Power, to buy additional coal-fired generation.

The coal power–producing states of Kentucky, Ohio, Pennsylvania and West Virginia all generated less power in 2012 than in 2011: between 1 and 9 percent less.

Coal lost significant ground in Kentucky, Ohio and Pennsylvania, where its share of total generation dropped from 1.4 percent in Kentucky to fully 11.2 percent in Ohio.

Natural gas gained generation share in those states, from 1.8 percent in Kentucky to 8.4 percent in Ohio.

Coal and gas generation remained essentially flat in West Virginia at 96.6 percent and 0.3 percent respectively in 2012.

The same trend is evident over the period 2007-2012, during which generation became increasingly more diverse in Kentucky, Ohio and Pennsylvania.

Residential electricity rates have risen in all the states, but more the less diverse a state's generation mix.

Rates rose 17 percent in most-diverse Pennsylvania, 22 percent in Ohio, 27 percent in Kentucky and fully 46 percent in West Virginia over the period.

Although fuel is a large part of the cost of electricity, rates are not a direct reflection of fuel diversity. They can lag changes in fuel prices and generation mix by a year to several years. And they are affected differently state to state by attempts to spread out the cost of fuel spikes over a number of years, as is the case with Appalachian Power in West Virginia right now, or by deregulation, as is the case in Ohio.

But it's worth noting that, in the one state of these four where fuel diversity has been increasing for a decade and aggressively since 2007 — Pennsylvania — average residential rates fell for the first time in 2012.