Northeast US utility National Grid on 9 February asked Massachusetts regulators to approve a six-year natural gas supply contract it signed with the owner of the Everett LNG import terminal near Boston that could stop the facility from retiring at the end of May.
National Grid requested a final decision from the Massachusetts Department of Public Utilities (DPU) by 1 May to assure Constellation Energy's facility can remain operational after a cost-of-service agreement between the New England grid operator and Everett's biggest customer, the 1,413MW Mystic gas-fired power plant, expires on 31 May. This ratepayer subsidy from ISO-New England has allowed Mystic, which Constellation also owns, to generate power from regasified LNG, which trades at wide premiums to US pipeline gas. Mystic's purchases have kept Everett solvent even as global LNG prices soared amid the Russia-Ukraine conflict.
The deal provides National Grid's 950,000 customers in Massachusetts with 26mn cf/d (740,000 m3/d) of natural gas over six years, with a seasonal quantity of 480mn cf in the first year that will increase alongside National Grid's need for imported LNG. The deal will fill a deficit in National Grid's available peak day portfolio and improve gas system reliability, National Grid said. The company has not identified "any other viable alternatives" that can address its "immediate need" for such supply and provide the same level of gas system reliability, it said.
Constellation does not have other contracts that would keep Everett solvent when the cost-of-service agreement expires, National Grid said. ISO-New England has said it does not intend to extend the cost-of-service agreement, so Everett's owner, US utility Constellation, has been scrambling for months to land new contracts with gas distributors.
The deal may alleviate concerns among those in the energy industry who have warned an Everett closure would have serious repercussions for the gas and power system reliability of the region. Regional gas local distribution companies (LDCs) in July warned they would have few alternatives for sourcing gas if Everett closed. The US Federal Energy Regulatory Commission and the non-profit National Electric Reliability Corporation in November issued a joint statement saying they were "concerned" about New England's energy reliability and affordability in the event Everett closed. Meanwhile, ISO-New England has said the region is not at risk of power shortfalls over the next two winters if Everett closes.
Massachusetts has taken a sterner approach to natural gas as it seeks to meet its greenhouse gas emissions reduction targets. The state is piloting a program to allow some municipalities to ban fossil fuel hookups in new buildings, and DPU, the regulator that must sign off on the Constellation-National Grid deal, in December issued an order prohibiting cost recovery for new gas infrastructure unless gas distributors can prove non-gas alternatives are not viable.
DPU will be applying "a different lens … to gas infrastructure investments going forward," the regulator said in the order.
New England generates much of its power with natural gas, yet the region has scarcer pipeline capacity than elsewhere in the US, causing price spikes when its few interstate pipelines' operational capacity near their limits, as they regularly do in the region's chilly winters.
