NATIONAL GRID is seeking state approval to purchase liquefied natural gas from the Everett Marine Terminal over the next six years, a supply arrangement that will drive up the bill of a typical gas customer during winter months by an average of nearly 1 percent a year.
The deal between National Grid and Constellation Energy, the owner of the Everett terminal, was filed on Friday with the Department of Public Utilities. If approved, it will allow the Everett LNG terminal to continue operating even though its biggest customer, the Constellation-owned Mystic Generating Station located next door, is closing at the end of May.
Eversource Energy said it is pursuing a similar contract with the Everett LNG terminal, but doesn’t plan to file it with the Department of Public Utilities until Monday. Constellation said it hopes to announce similar contracts with others soon.
Several environmental groups have called for the shutdown of the Everett LNG facility, but state, regional, and federal regulators have been worried that without it the regional gas system could be vulnerable to supply disruptions during winter months when demand for natural gas peaks but supplies are often limited.
The utilities have contracted with the Everett Marine Terminal in the past, but officials characterized their new proposed contracts with Constellation as a way to maintain reliability on the gas distribution system without building new fossil fuel infrastructure.
“National Grid is committed to accelerating plans to achieve the Commonwealth’s decarbonization goals and views this time-limited agreement as a bridge to the clean energy future – ensuring the overall safe operation and integrity of the local gas distribution network while keeping customers warm on winter’s coldest days and avoiding new gas infrastructure and associated emissions,” National Grid said in a statement.
“Of all the options available today, this is the least bad,” one utility official said.
The Mystic Generating Station, once the largest power generator in New England, and the Everett Marine Terminal have played outsized roles in the region’s energy debate over the last several years. Constellation several years ago planned to shut down the power plant, but the operator of the regional power grid kept it open using assessments totaling hundreds of millions of dollars on ratepayers across the region.
Last year, the operator of the New England power grid said the plant and the LNG facility were no longer needed to meet the electricity needs of the region, but regulators said it would be unwise to allow the LNG importation facility to close.
In an unprecedented statement issued in November, Willie Phillips, the chair of the Federal Energy Regulatory Commission, and James Robb, the CEO of the North American Electric Reliability Corporation, made a plea to state regulators to keep the Everett Marine Terminal open.
“With respect to the natural gas system, the evidence raised what we view as serious concerns about certain local gas distribution systems’ ability to ensure reliability and affordability in the region without Everett,” the two officials said. “And, although there was evidence that the retirement of Everett would be ‘manageable’ for the electric system, at least in the near-term, given anticipated new resource deployments and transmission development, minimal load growth, limited resource retirements, and increased reliance on non-natural gas generators, the evidence indicates that, should those expectations not materialize as anticipated, ensuring reliability and affordability could become challenging in the face of a significant winter event.”
William Hinkle, a spokesman for Eversource, echoed those concerns in a statement. “While the region continues to rely on natural gas to reliably serve customers today, this does not hinder our focus on bringing more new clean energy solutions online and making the necessary infrastructure upgrades to support decarbonization and electrification as quickly as possible,” he said.
National Grid said its proposed contract with Constellation would increase a residential heating customer’s bill between November and April by $3.50 a month, or about 1.4 percent on the average bill of $250. Increases in subsequent years would range between 0.3 percent and 1 percent year over year, National Grid said. National Grid has 950,000 gas customers in the region.
Dan Dolan, the president of the New England Power Generators Association, endorsed what the utilities are doing. “This is the right thing for Massachusetts based on the statements I have seen from the gas utilities,” he said.
He said the deal also guarantees that the gas-fired Mystic Generating Station is permanently retired. “The power plant going away is a big deal,” he said.