Dive Brief:
- The long-term energy plan for New England calls for reduced dependence on liquefied natural gas imports, but local utilities and the region’s electric grid operator say Constellation Energy’s Everett LNG terminal outside of Boston must be maintained in order to ensure adequate gas for generation and heating while the transition occurs.
- The Everett terminal can deliver up to 435 MMcf/d into regional gas pipelines, but it is supported by Constellation’s 1,413-MW Mystic Generating Station which is set to retire in 2024.
- “The region must ensure the continued operation of the Everett LNG Facility to maintain reliable electric and natural gas service for New England consumers,” ISO New England said in a problem statement published Tuesday.
Dive Insight:
ISO New England, along with the region’s gas and electric distribution companies, published the problem statement to “help inform the discussions” ahead of a Federal Energy Regulatory Commission meeting on gas-electric coordination scheduled for Sept. 8 in Burlington, Vermont.
“By raising awareness of this issue ahead of the upcoming forum, ISO New England and the region’s utilities hope to begin the process of developing a strong, coordinated response with the New England states, NEPOOL, and regional stakeholders to assure that energy adequacy is consciously addressed as the region charts a course toward a clean power system,” ISO-NE President and CEO Gordon van Welie said in a statement.
One issue is a lack of long-term fuel and electricity commitments in the region, said the ISO.
Most buyers of electricity in New England “generally have a short position in the market and are not making long-term commitments to electric energy suppliers, nor do these suppliers have a ‘firm fuel’ obligation under the ISO’s FERC-regulated tariff,” the grid operator said.
Without more firm LNG buyers, Constellation can’t make the investments and procure gas supplies needed to keep the import terminal running. New England’s power grid depends on a reliable gas system, the ISO said, but “the regulatory oversight of the two systems is not fully compatible.”
The need to maintain the Everett terminal “will extend for a finite period” beyond Mystic’s planned closure in June 2024, the ISO said, “and until the required infrastructure investments are made to reliably enable the envisioned clean energy future.”
“Energy adequacy is an under-appreciated, poorly-understood, but vitally-important component of a successful clean energy transition,” van Welie said.
The ISO’s problem statement contemplates the development of an “energy reserve” to help the region “manage through extended periods of severe weather or energy supply constraints.” This could be achieved in several ways, the ISO said, including:
- “State regulated cost-of-service infrastructure investments coupled with contracting for the necessary energy;
- FERC regulated cost-of-service rates for recovering investments in infrastructure and forward energy supply chain arrangements;
- [or] FERC regulated wholesale electric market tariffs that rely on uniform clearing price mechanisms to incent investments in infrastructure and forward energy supply chain arrangements.”
The ISO also said the region should develop a “comprehensive study of both the energy adequacy problem and the potential solutions for addressing the problem.” The grid operator anticipates the electrification of heating and transportation end uses will more than double the size of the region’s power system over the next two decades.
The region has plans to add large amounts of wind, battery storage and solar, but the ISO has said some “balancing resources” will remain necessary for reliability. There are some concerns, however, about the long-term cost of LNG.
The United States is the world’s largest exporter of LNG, according to the U.S. Energy Information Administration. Exports grew 12% in the first half of this year, compared with the latter half of 2021, according to the agency.
Sen. Angus King, I-Maine, at a May Senate Energy and Natural Resources Committee hearing, pointed to the increase in LNG exports as a cause for rising electricity prices. He said the U.S. exports about 15% of its gas production today, but approved export applications could push that north of 50%.
