Grid operator, utilities call for energy reserve
Also say Everett LNG facility should remain open beyond June 2024
THE OPERATOR of the New England power grid and six of the region’s major utilities are calling on state and federal policymakers to develop an “energy reserve” that can be tapped when energy supply chains are disrupted.
In a call to action memo in advance of a September 8 conference sponsored by the Federal Energy Regulatory Commission, ISO New England and the utilities said the energy reserve “can be viewed as regional insurance to cover relatively low probability risks,” including extreme weather or the possibility of multiple pieces of the grid’s infrastructure going offline at the same time.
The call to action also says the liquefied natural gas facility in Everett must remain in operation for “a finite period beyond June 2024,” when price supports for the adjoining Mystic Generating Station are scheduled to expire and the plant to close. Both the generating station and the LNG facility are owned by Exelon.
The Federal Energy Regulatory Commission approved subsidized rates for Mystic on a 2-1 vote in 2018, largely to keep the adjacent LNG facility going. The LNG facility is capable of injecting gas into the pipeline system during winter months when supplies can run short for power generation during extended cold spells.
The expectation was that significant renewable energy resources would be coming online by 2024, making the Mystic plant and the LNG facility expendable. But those renewable energy resources, particularly hydro-electricity from Quebec, have been delayed, so the problem is continuing to linger.
“In sum, we believe that, for the clean energy transition to be successful, the region must continue to have reliable supplies of gas for home heating and electricity. Without adequate gas, the region may not be able to meet the demand for home heating and electricity – and, when reliability suffers, the clean energy transition suffers,” said the memo with the phrase bolded. “We have seen that story play out in Europe, Australia and, closer to home, in California and Texas. In sum, it is critical to the region’s decarbonization goals that the lights and heat stay on in New England – and, for the foreseeable future, that requires gas.”
It’s unclear under the current regulatory structure who should pay for LNG. Power plants that run on natural gas have little incentive to invest in long-term contracts for LNG and LNG suppliers are reluctant to invest in infrastructure and supplies without long-term contracts.
In 2014, according to the memo, the Massachusetts Supreme Judicial Court shot down a proposal to have electric utilities purchase LNG contracts on the grounds that the Department of Public Utilities lacked the authority to order them to do so.
“In short, there is a structural problem that encompasses the gas and electric systems and there is a bifurcated state and federal regulatory system for addressing it,” the memo says.
The memo was a joint effort of ISO New England, Avangrid, Eversource, Liberty Utilities, National Grid, Rhode Island Energy, and the Vermont Electric Company.