Manchin Bailed Out a Power Plant That Helps His Family Profit From Coal Waste

In the late 1980s, Joe Manchin was a West Virginia state senator with a part-time salary from the legislature and a failing carpet business.

According to a 2014 lawsuit filed by Joe’s brother, Dr. John Manchin II, the Manchin Carpet Center, which Joe had started years before with their brother Roch, required funding and a loan guarantor to avoid bankruptcy.

To bail his brothers out, John Manchin’s suit claims he provided more than $1.7 million to pay off their debt in exchange for becoming a partner in their company Manchin Brothers and a one-third stake in the brothers’ next venture: a coal reserves and brokerage business.

The Manchins had agreed that John would be repaid in full out of proceeds from the coal business, his breach of contract suit states, but what happened instead led to a decades-long rift. The suit claims that Joe and Roch Manchin, out of hot water, soon sold off the carpet company, then quietly dissolved Manchin Brothers and transferred its remaining funds and assets to Manchin Enterprises, controlled by Joe and his son Joseph Manchin IV.

Documents John Manchin submitted to the court include a July 2012 repayment agreement that appears to be signed by Joe and Roch, as well as a surprising bit of evidence: a letter on U.S. Senate letterhead from the chief counsel to Joe Manchin, by then a U.S. senator, regarding a “Funds Sharing Agreement” to sign.

According to the agreement, the three brothers would split money from a proposed power plant in Greene County, Pennsylvania, being developed by Wellington Development. But Dr. Manchin determined that Joe had no interest in Wellington and hadn’t received any payments from it and declined to sign the agreement or, initially, to drop his lawsuit.

Joe Manchin would not comment on the dispute, calling it a “family matter,” and Dr. John Manchin dropped the lawsuit against his brothers in June of 2015.

Joe and Roch Manchin’s businesses in the late 1980s and early 1990s included the carpet store, real estate, and some fledgling plays in the area’s coal industry. One of the entities Joe Manchin founded in 1987 was the mining services company Transcom, later reorganized to be Farmington Resources, named after the family’s hometown in coal country. Joe Manchin continues to hold up to $500,000 in assets in the company, according to his most recent financial disclosure.

But it was the coal brokerage he co-founded in 1988, Enersystems, that has provided the vast majority of Joe Manchin’s outside income since becoming a U.S. senator: over $4.5 million in total, including nearly half a million dollars last year. While he serves as chair of the Senate Energy Committee, Manchin reports that his stake in his family coal company, which has a fuel agreement with the waste coal-fired power plant in Grant Town, West Virginia, is worth up to $5 million.

Enersystems, now run by Joseph Manchin IV, has virtually no online presence and is inaccurately tagged as “permanently closed” in its Google Maps listing. Its registered address is in the Manchin Professional Building plaza in Fairmont, West Virginia, where it is located along with the Manchin Law Group, a firm founded by Joe’s cousin Timothy Manchin.

From public records, interviews with individuals in the West Virginia coal industry, and reports from environmental advocates, a clearer picture emerges of how Enersystems grew to send millions of dollars in income to Sen. Manchin, who is now worth an estimated $7.6 million and entertains lawmakers on his D.C. houseboat — and holds a crucial vote over the climate policies and voting access bills up for consideration this month in Congress.

For this story, Sludge sought comments from Sen. Manchin’s office and Joseph Manchin IV at Enersystems, among others detailed below, and received no response to multiple inquiries.

Millions as a Waste Coal Middleman

Enersystems was incorporated on Oct. 20, 1988 by Roch Manchin with Joe Manchin as president, secretary, and treasurer. While the private company does not make its financial information public, it has filed annual reports with the West Virginia Secretary of State for most years since 2000.

At the time, the Manchins’ home county of Marion was gearing up for the construction of an 80 megawatt waste coal-fired facility proposed by American Bituminous Power Partners LP (AmBit) and approved by regulators to provide power to electric utility Monongahela Power Company (Mon Power). In 1990, construction on the approximately $185 million Grant Town Power Plant commenced at the former site of the Federal #1 mine.

Through decades of mining activity, piles of waste coal — referred to as “gob” in West Virginia — had accumulated around former mining sites. The Grant Town Power Plant consumes around 565,000 tons of waste coal annually, and records from the West Virginia Public Service Commission (PSC) show that Enersystems has held a waste coal handling agreement with AmBit since at least 1999 and a waste fuel services agreement since at least 2013.

According to a PSC transcript from 2017 of the cross-examination of witness John Mustonen, a consultant for AmBit on the Grant Town Power Plant operations, Enersystems performs virtually all of the plant’s operating and maintenance functions. Mustonen confirmed that project labor costs at the Grant Town facility were $1 million a year higher than those of six comparable plants, but he testified that the higher costs were justified by savings on overall operations and maintenance. Two AmBit employees did not respond to requests for comment on the breakdown of costs in Enersystems’ waste fuel services agreement, which the PSC labeled as confidential. In 2017, according to court records from the PSC, the price of waste coal from the Barrackville refuse pile, where Enersystems sourced its fuel, was nearly $16 per ton, with hauling costs at $3.50 per ton and handling costs at $2.50 per ton.

Due to the low quality of the waste coal burned there, the Grant Town Power Plant produces more sulfur dioxide and nitrous oxide per unit of energy output than any other coal plant in the state, according to 2018 calculations from Jim Kotcon of the West Virginia Sierra Club. The federal government effectively subsidized the construction of waste coal-burning plants with the passage of Public Utility Regulatory Policies Act of 1978 (PURPA), mandating that local utilities buy the electricity generated at above-market rates, attempting to create jobs while reducing the environmental blight of gob piles.

“The issue is that burning the gob creates pollution from the plant,” the chapter’s conservation chair Kotcon told Sludge. “Add in the greenhouse gas emissions and increasing price competition from renewables, and we conclude that a land reclamation approach is preferable to burning the gob.”

While a state senator in the 1990’s, Manchin was periodically invited to submit regulatory comments to the PSC on behalf of Enersystems. By 1994, Manchin had become state chair of the right-wing American Legislative Exchange Council (ALEC) and a national director of the secretive group, which crafts model bills that benefit corporate interests such as its fossil fuel industry members. In 2000, when he was elected Secretary of State, Manchin handed the operation of Enersystems to his son Joseph, and after being elected governor in 2004, said he put his investments in a blind trust.

Rescues for AmBit and Waste Coal

As governor, Manchin allied with the coal industry by moving the state’s Department of Environmental Protection from enforcement toward what he called “compliance assistance,” effectively removing deterrents for pollution from mining. Over three campaigns for statewide office, he raised nearly $330,000 from businesses, unions, and individuals in the mining industry, putting mining interests among his top career donors, according to the National Institute on Money in Politics. His campaigns in 2000, 2004, and 2008 also brought in nearly $30,000 in donations from the electric utility industry.

In 2006, Enersystems’ business partner AmBit represented to the PSC that it was in financial distress and would be forced to discontinue operations at Grant Town unless its revenue was increased. Unlike a petition a decade earlier, Mon Power joined the petition, and the PSC, under Manchin, approved three amendments to the agreement between the companies that benefited AmBit: an increase in the rate it was paid by Mon Power, from $27.25 to $34.25 per megawatt-hour; an extension of its agreement from the original 2028 until 2036; and deferment of some repayments. Though Gov. Manchin held his Enersystems stake in a blind trust, the rescue of the Grant Town coal plant by the PSC, whose commissioners are appointed by the governor with the approval of the State Senate, likely saved his company’s contract there.

Mon Power, in turn, was authorized by the PSC to pass on the higher costs set by the 2006 amendments to West Virginia ratepayers. According to watchdog group Energy Efficient West Virginia, Mon Power customers saw their rates increase by 30% from 2008 to 2011.

In 2009, then-Gov. Manchin directed the West Virginia House speaker to introduce the Alternative and Renewable Energy Portfolio Act, later signing it into law. The bill requires the state’s power companies to produce a certain portion of electricity from renewable or alternative fuels, but it defined alternative fuels to include many sources of greenhouse gas pollution, specifically stating that waste coal would qualify.

‘Friends of Coal’

Manchin was first elected to the U.S. Senate in the Nov. 2010 special election to fill the seat of Robert Byrd. Just under a month before the election, which Manchin won with over 53% of the almost 530,000 votes cast, he announced the state would sue the Environmental Protection Agency to defend the coal mining industry’s mountaintop-removal practices. Also in Oct. 2010, Manchin appeared at a rally of Friends of Coal, an industry-created nonprofit advocacy group, to pledge his support.

Manchin’s favors for the coal industry as West Virginia governor didn’t just benefit Enersystems’ business partners — those around him also cashed in on their connections to the industry. When Manchin moved to D.C., his longtime chief of staff Larry Puccio, who had been with him from the Secretary of State’s office to the Governor’s Mansion, started lobbying for businesses including the Virginia-based Southern Coal Corporation. Puccio was also elected chairman of the West Virginia Democratic Party, and in 2015 stepped down from that role to become chairman of Manchin’s leadership PAC, Country Roads PAC. As of 2014, Puccio’s lobbying practice had Mon Power owner FirstEnergy as a client, and state ethics records show that Puccio has remained registered to lobby for FirstEnergy since 2017. FirstEnergy’s PAC has donated $35,000 to Country Roads PAC since the 2009-2010 election cycle, according to Federal Election Commission records, with more donations coming in to the PAC from American Electric Power, Dominion Energy, and trade group Edison Electric Institute.

By 2015, the Grant Town coal-fired plant needed another rescue, and the PSC allowed the higher rate of payment set to expire in 2017 to stay in place, sending $4.6 million more annually to AmBit. The West Virginia Sierra Club and other groups have been battling the PSC’s bailout, arguing that the agency should prioritize investments in renewable energy over the polluting coal-burning plant, and noting that between 2013 and 2016, payments to Grant Town exceeded the market price of power by over $56 million.

Bailing out money-losing coal plants like Grant Town has proven costly for state ratepayers, according to Emmett Pepper, policy director for Energy Efficient West Virginia. Pepper submitted testimony to the PSC in utilities cases with findings that from 2009 to 2018, the amount the average household pays for its residential electric bills increased from 2.8% to 3.4% of its median income — currently standing a full percentage point higher than households in Ohio, Pennsylvania, or the United States average. “Our position is that Mon Power and others should have energy efficiency programs to help ratepayers take control of their own energy bills and reduce costs,” Pepper said.

Just this week, the PSC approved the coal-fired Mitchell Plant in West Virginia to continue operations until at least 2040. A recent report from the International Energy Agency found that extraction of fossil fuels including goal and natural gas must immediately cease, and that advanced economies must zero out emissions from polluting power plants as soon as 2035, in order for the planet to avoid the worst effects of catastrophic climate degradation.