EXELON GENERATION told federal regulators on Wednesday that it is willing to keep operating two power plants and a liquefied natural gas facility in Everett from 2022 to 2024 if the company is allowed to collect less than $1 a month from all of the electricity customers in New England over the two-year period.
Chicago-based Exelon said in a press release that the actual amount could end up being “considerably less” than a dollar a month if revenue from operating the plants is significant. The company agreed to offset its estimated costs with the revenue it receives from running the plants. The revenues will be dependent on weather conditions and energy prices from 2022 to 2024, the company said.
The so-called Mystic gas-fired generating plants in Everett are some of the biggest in New England, but they cannot compete in today’s energy markets – their costs are too high. Exelon said in March that it planned to retire the plants at the end of May 2022 rather than continue to lose money.
But the operator of the regional power grid said it needs the 1,700 megawatts of electricity the plants are capable of generating. In its own filing with federal regulators, the grid operator, ISO-New England, warned that without the two Mystic plants it would be forced to impose rolling blackouts over the two-year period if the region faced a winter comparable to the one in 2014-2015.
The regional grid operator has said it is worried about its ability to keep the lights on during winter periods when temperatures plunge and demand for natural gas rises for heating and power generation. Because of pipeline constraints that limit the amount of natural gas coming into the region, ISO-New England says it needs to keep the Mystic plants running because they rely on liquefied natural gas brought in via tankers instead of gas brought in by pipeline.
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About Bruce Mohl
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.
About Bruce Mohl
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.
As Exelon explained in its filing with the Federal Energy Regulatory Commission, “the attribute that makes Mystic 8 & 9 attractive to ISO-NE for fuel security reasons is part of what makes the units uneconomic: their reliance on expensive imported liquefied natural gas.”
Much of Exelon’s filing focused on its estimate of the costs of operating the two power plants and the adjacent liquefied natural gas facility it is in the process of acquiring. Exelon said its annual fixed revenue requirement for the two plants totals nearly $219 million in 2022-2023 and nearly $187 million in 2023-2024. The company said its cost estimate includes an overall rate of return of 8.46 percent, based on a cost of debt of 4.76 percent and a return on equity of 10.26 percent.
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