NEW ENGLAND electricity customers paid $536 million during the first year of a two-year contract to prop up a power plant and liquefied natural gas facility in Everett as a hedge against regional energy shortages, according to an analysis released by the region’s power grid operator.
The natural gas-fired Mystic power plant is shutting down for good next June, but the fate of the Everett Marine Terminal is unclear. Natural gas utilities in the area are in negotiations to keep the LNG facility running, which would mean the hefty cost could be passed along to a much smaller base of customers. That may also raise separate concerns for Gov. Maura Healey, whose administration is seeking to do away with fossil fuel infrastructure, particularly when it is located in environmental justice communities.
The Everett facility is at a unique junction on the road to a more climate friendly future. The owner of the power plant and the accompanying LNG facility announced in 2018 that it planned to shut down the Mystic power plant in 2022, which would have put the future of the LNG facility in doubt because Mystic is its largest customer.
Fearing power grid instability without access to the LNG terminal, ISO New England, the operator of the regional power grid, and the Federal Energy Regulatory Commission approved orders agreeing to pay Constellation Energy to keep the facility open from June 2, 2022, through May 31, 2024, with electricity ratepayers across the region picking up the tab.
According to a recently released analysis of the first 13 months, the tab for this “energy insurance” came to $536 million. The analysis indicated the power plant/LNG facility was in operation for one month, “predominately offline” for five months, and engaged in “tank congestion management” for seven months. Tank congestion management is when the LNG is drawn down to make way for new shipments coming in by tanker.
“It would seem this facility was not used that heavily,” said Dan Dolan, president of the New England Power Generators Association, which neither supported nor opposed the FERC-approved plan to keep the facility running.
According to the ISO New England analysis, the average monthly cost to operate the Everett facilities was $41.1 million, but that includes two winter months when natural gas prices soared due to the war in Ukraine and the cost rose to $150.1 million in January and $104.9 million in February.
The Mystic power plant is definitely closing in June 2024. ISO New England announced in June that it believes the LNG facility is no longer needed for reliability of the electric grid, but the region’s gas utilities are now negotiating with the owner to keep it open as a security blanket for their operations.
In response to a survey from the Massachusetts Department of Public Utilities, both National Grid and Eversource said they need the LNG facility to continue operating.
“National Grid has had to rely on the Everett LNG facility for many years, as a critical gas resource,” the company said in its filing with the DPU. “National Grid utilizes the Everett LNG facility within the gas-resource portfolio in both liquid and vapor form to meet design hour, design day, and design season customer requirements.”
National Grid added: “There are no alternatives currently available in the marketplace that offer the services provided by the Everett LNG facility.”
Both National Grid and Eversource used identical language to say additional gas supplies are needed in the cold winter months when gas supplies in the region can dwindle in the face of demand for energy to heat homes and businesses and keep power generators running.
“The Everett LNG facility serves as a critical reserve unit in the context of a wholesale generation market that is still reliant on natural gas for almost half of the generation supply,” the utilities said. “The [natural gas utilities] cannot solve the region’s supply issues. Instead, the [natural gas utilities] have an obligation to their customers to maintain the reliability of natural gas distribution and supply service and the [natural gas utilities] will take all necessary steps within their control to assure that their customers have heat on cold winter days.”