FERC has rejected a rehearing request from a group of New England public power utilities seeking the disclosure of additional information related to the Mystic cost-of-service agreement between Constellation and ISO-NE (ER18-1639-026).
In October, FERC initially ruled against the public power groups’ request for additional disclosures of information, focused on the agreement’s supply arrangement with the nearby Everett LNG import facility. (See FERC Rules Against Additional Mystic Agreement Disclosures.)
The public power organizations argued in their November rehearing request that FERC improperly denied outside entities the ability to review and challenge data related to the Mystic Generating Station’s revenues and the management of Everett as a part of the Mystic agreement. Both Everett and Mystic are owned by Constellation.
The coalition wrote that FERC’s denial of the request for more transparency “pulls an impenetrable veil over information that the ISO-NE customers … require in order to verify the justness and reasonableness of the charges imposed on them and their customers.”
In its Feb. 15 response to the rehearing request, FERC stood by its decision to deny additional public disclosures.
“We continue to find the Mystic Agreement’s arrangement is just and reasonable and appropriately provides sufficient assurance that the inputs to the Mystic Agreement filed rate are accurate,” FERC wrote.
The commission emphasized its prior finding that ISO-NE’s auditing rights in the agreement “are sufficient to ensure accuracy and transparency while preserving the confidentiality of commercially sensitive information and avoiding security risk.”
ISO-NE and Constellation signed the Mystic agreement in 2018 over concerns that Mystic’s impending retirement would introduce significant resource adequacy risks to the regions. The cost-of-service agreement to retain Mystic began in June 2022 and will expire at the end of May 2024.
As Mystic is the main customer of LNG from Everett, its looming retirement has triggered an ongoing effort to retain Everett after Mystic’s retirement. The two largest gas utilities in Massachusetts recently announced agreements with Everett to keep the LNG import facility operating for six more years, subject to the approval of the Massachusetts Department of Public Utilities. (See Constellation Reaches Agreements to Keep Everett LNG Terminal Open.)
ISO-NE has not been involved in the negotiations to keep Everett open beyond the end of the Mystic agreement. The station is on track to retire at the end of the agreement in the spring.
The costs associated with the cost-of-service agreement have been substantial; ISO-NE estimated that it cost ratepayers more than $600 million in the first 18 months of the agreement. More than $200 million of this cost came solely from January and February of 2023, driven by the spike in global LNG prices.
Everett’s primary operational conditions for these months were listed as tank management, which includes self-scheduling to run and burning off excess fuel to make room for prescheduled LNG shipments.
“While we remain sympathetic to customers’ concerns regarding the high costs of the provision of fuel security by the Mystic units, we believe we have struck the right balance,” FERC wrote in its rehearing response. “We are not persuaded that providing the additional information … is necessary to verify Mystic’s costs and ensure that the Mystic agreement’s filed rate is accurately implemented.”
The public power entities also challenged FERC’s ruling with the D.C. Circuit Court of Appeals in early February, writing that “the commission’s decision to prevent customers from verifying the justness and reasonableness of the charges imposed on them through the cost-of-service agreement is not supported by substantial evidence or reasoned decision making, as required by the Federal Power Act.”
