The Massachusetts Department of Public Utilities has approved agreements between Constellation Energy and the state’s investor-owned gas utilities to keep the Everett LNG import facility operating through May 2030.
The Everett Marine Terminal (EMT) is the only facility in the state that can import and directly inject LNG into the gas network, but it has faced an uncertain future, with Constellation’s cost-of-service agreement with ISO-NE expiring at the end of this month. Constellation owns both Everett and the Mystic Generating Station, Everett’s anchor customer, which is set to retire at the same time.
Following extended negotiations with the state’s gas utilities dating back to 2021, National Grid, Eversource Energy and Unitil filed agreements with Constellation in February to help cover the facility’s fixed costs and provide the utilities the option to purchase LNG as needed.
The utilities argued that the agreements were necessary for the reliability of the gas network, but they were met with pushback by environmental organizations and state agencies about the cost and climate implications of the agreements. The Conservation Law Foundation (CLF) opposed the agreements, while groups including Enbridge, Tennessee Gas Pipeline and Constellation supported the utilities’ filings.
Neither the Massachusetts Attorney General’s Office nor the state Department of Energy Resources took an explicit stance on the contracts, but both called for additional transparency and reporting requirements. (See Mass. AGO, DOER Call for Climate Guardrails on Everett LNG Contracts.)
In its ruling, the DPU found that “without the agreements, each company will not have sufficient natural gas supplies to reliably serve its customers in design-winter scenarios during the term of the agreements, which could jeopardize the health and safety of its customers during the cold winter months.”
Responding to CLF’s argument that utilities did not adequately consider alternatives, the DPU ruled that “the alternatives to the agreements currently available to each company, including electrification, are insufficient to fully replace supplies from EMT or provide the reliability benefits that EMT offers.”
The DPU also disagreed with CLF’s contention that the agreements are not compatible with the state’s climate laws. The department noted that Eversource’s and Unitil’s contracts are intended to replace existing gas supply contracts and are therefore in line with the precedent set by previous rulings.
Meanwhile, National Grid indicated that its contract is needed in part to help meet increasing gas demand from oil-to-gas heating conversions. The department found that this justification is aligned with previous rulings “that the acquisition of incremental natural gas supply to serve new customers that convert from oil heating to natural gas heating is consistent with the” Global Warming Solutions Act.
However, the DPU wrote that it may need to revisit this precedent following its December 2023 order (20-80-B) creating “a new regulatory framework” to discourage new investments in gas infrastructure. (See Massachusetts Moves to Limit New Gas Infrastructure.) The department also said it intends to consider whether equity and affordability impacts should be included in the evaluation of similar contracts going forward.
Instead of changing the standard of review within the Everett proceedings, “the department finds it appropriate to engage in a more thoughtful, comprehensive process involving the participation of all interested stakeholders,” the DPU wrote.
The department agreed to include annual transparency and reporting requirements around the cost and climate effects of the agreements, as well as on the utilities’ efforts to reduce their need for Everett.
“We agree with the attorney general and DOER that open and transparent insight into the companies’ efforts to reduce or eliminate their reliance on EMT is critical to ensuring that the commonwealth remains on a path to achieve its decarbonization goals,” the DPU wrote.
Throughout the process, climate and environmental advocates in the state have expressed concern that the contracts could function as a stop-gap measure to a more permanent pipeline capacity expansion into the Northeast. Enbridge has said it could complete a major capacity expansion of the Algonquin pipeline by the end of the decade. (See Enbridge Announces Project to Increase Northeast Pipeline Capacity.)
Joe LaRusso, senior advocate at the Acadia Center, said the DPU’s approval of the contracts is “potentially in conflict with Order 20-80,” particularly if the contract timelines are intended to align with Enbridge’s pipeline expansion effort.
He said the reporting requirements should give the DPU ample information on the utilities’ gas demand trajectories, with the “open question” being whether the DPU allows the companies to reduce their reliance on Everett by securing additional pipeline capacity.
Meanwhile, Constellation applauded the DPU’s ruling, writing in a statement that the contracts will help “ensure adequate gas availability during extreme weather conditions as the region transitions to clean energy.”
