Constellation Energy plans to retire a Massachusetts gas power plant at the end of May

Constellation Energy plans to retire a Massachusetts gas power plant at the end of May, which will eliminate the biggest user of the liquefied natural gas (LNG) that is imported through the company’s Everett Marine Terminal. Constellation is trying to line up new gas buyers to keep the terminal running. If it cannot, it will likely close the import facility. New England utilities rely on imported LNG supplies for heating during the winter when demand peaks. National Grid, which has more than two million gas customers in Massachusetts and New York, obtains gas from the Everett terminal that it pipes around Boston and trucks to storage tanks across the region ahead of each winter. Without it, severe cold could leave their customers without gas to heat their homes. Despite the United States being awash with natural gas, Massachusetts relies on imported LNG because the state has opposed pipelines to get natural gas from nearby Pennsylvania production wells—gas that would be significantly cheaper than imported LNG. New England residents paid about 31 percent more for natural gas in the fourth quarter of 2023 than the U.S. average, according to the Energy Information Administration.

Constellation is planning to close the 1.4 gigawatt Mystic Generating Station at the May 31 expiration of a deal with regulators–a two-year agreement intended to bolster the region’s energy supplies. A big issue for keeping the nearby LNG terminal open is how to cover the terminal’s overhead, most of which is currently recouped through New England electricity bills tied to the nearby power plant. It could cost about $60 million a year to cover the terminal’s fixed operating costs, plus the price of the LNG, which could amount to hundreds of millions of dollars annually.

According to regulators, a December 2022 winter storm serves as an example of why utilities need quick access to reserves of natural gas. The winter storm caused demand to surge and gas wells in Appalachia to freeze with pressure dropping dangerously low on the Consolidated Edison’s pipeline system around New York City. The utility was able to tap its own LNG reserves to stave off damage that could have knocked out service and taken months to repair. Everett LNG was and is the insurance against the lights and heat going out during extremely cold stretches.

New England’s Need for Everett

The Everett LNG Terminal is needed because of the difficulty of building energy infrastructure in the Northeast. Pipeline projects have been blocked that would deliver gas from shale-gas fields in Pennsylvania, Ohio and West Virginia. For example, in 2016, Massachusetts and New Hampshire blocked financing for the $3 billion Access Northeast Pipeline, which would have lowered prices and eliminated the reliance on LNG. Since 1971, the Everett Marine Terminal has been providing gas to New England and is one of the few remaining import terminals in the United States. When the shale gas renaissance made the United States the largest producer of natural gas in the world, most of the U.S. import LNG facilities were retooled to become export terminals. Last year the United States became the world’s largest exporter of LNG.

The tankers filled with U.S. LNG, however, are not allowed to deliver the fuel to Everett or anywhere else in the United States due to the Jones Act–a 1920 law that restricts domestic shipping routes to U.S.-built and American-crewed vessels. Despite New England being served by a pair of interstate pipelines and Canadian gas, it has had to obtain additional supplies from more expensive imports from overseas, usually from Trinidad and Tobago, but also from Russia before sanctions stopped those imports due to Russia’s invasion of Ukraine.

New England Faces Challenges to Its Grid Due to Plant Closures

Both the power plant and the LNG facility’s shutdown underscores the challenges facing the American grid as the transition to green energy and Biden’s climate agenda accelerates. While Mystic may ultimately be replaced by intermittent wind farms and solar projects, it is not clear whether those facilities and the expensive battery storage needed to back up their unreliable power will be built quickly enough to prevent power shortfalls.

Renewable-power projects have met resistance in the Northeast. For example, in 2021, Maine voters scotched a transmission line that would carry hydropower from the Canadian border toward Boston. A transmission line being laid along the bottom of the Hudson River to carry hydropower from Quebec’s remote forests to New York City took 15 years to clear permitting and other hurdles before work began last year. Some New York offshore wind projects have been canceled or are in limbo after regulators rejected developers’ requests to charge higher power rates to account for their rising costs. In New Jersey, a European wind-power company canceled plans for two wind farms despite state financial incentives.

“Ensuring reliability and affordability could become challenging in the face of a significant winter event,” FERC Chairman Willie Phillips and NERC Chief Executive Officer James Robb said in a joint statement in November. According to the New England grid operator, it would be prudent to keep Everett operating for now. The number of LNG import facilities in the region is limited, new infrastructure could face delays and there’s uncertainty about how much winter power demand will grow as homes and businesses convert to electricity from gas.

Conclusion

The Mystic Power Plant and the Everett LNG terminal may close at the end of May if regulators do not keep it open and/or if the LNG import terminal cannot find enough customers to cover its costs. This puts the region in jeopardy during cold New England winters with possibly insufficient fuel to keep furnaces going and the lights on. Many see the Everett LNG import terminal as insurance against demand spikes and freezing weather that could make existing infrastructure inoperative. Biden’s rush to push green energy in the form of intermittent and unreliable wind and solar power on Americans is putting the electric grid in jeopardy and New England may be the first to experience the damage. The Biden Administration seems to be ignoring this growing problem, preferring to focus on its “climate change” agenda which includes ending all fossil fuels, including natural gas.