Everett grid ‘insurance’ cost $536m over first 13 months

Mystic Generating Station in Everett. (Photo by Bruce Mohl)

Economy/ Energy/ Government

By Bruce Mohl 0 Comments Aug 22, 2023

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.

“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.”

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

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.