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Everett LNG terminal on its way to staying open under deal with National Grid

The region’s only liquid natural gas facility — a key provider of electric power during times of high demand — was set to close this spring

The LNG tanker Gaselys, docked at the LNG terminal in Everett on the Mystic River upstream from the Tobin Bridge.Josh Reynolds for The Boston Globe

National Grid has inked a six-year agreement to purchase liquefied natural gas from Constellation Energy’s LNG terminal in Everett, a good sign that the fuel terminal will not close this year as many in New England’s energy industry have feared.

The fate of the LNG terminal has been uncertain because Constellation plans, by the end of May, to retire its remaining turbines at the nearby Mystic power plant, which has been kept open with electric ratepayer subsidies for the past two years. With the LNG terminal’s biggest customer going away, there was widespread concern among policy makers and energy executives that the half-century-old LNG terminal would go away, too. The terminal provides an important backup supply for the electric grid during winter months when most of the gas coming into the region by pipeline gets used to heat homes and businesses, instead of going to power plants.

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National Grid on Friday submitted a request to the state Department of Public Utilities to recover the costs for the natural gas supply from the utility’s heating customers. The agreement, National Grid said, would increase a typical residential heating bill by about 1 percent for the first year of the contract, or an average of $3.30 a month in the winter heating season. Winter bill increases for the five other years would be smaller, the company said. A National Grid spokeswoman declined to disclose the total cost of the contract.

While a number of industry executives worried about what the loss of the LNG terminal would mean for electricity reliability in the winter, National Grid in its filing said the focus for this deal is on ensuring a reliable supply of heating fuel for the company’s 950,000 residential and business customers in Massachusetts. The agreement, the company said in a prepared statement, is the most viable option to meet peak gas demand through 2030 without building new gas infrastructure. The potential closure, the company told the DPU, threatened National Grid’s ability to reliably serve its existing gas-heat customers on high-demand days.

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Constellation Energy's Mystic Generating Station is closing this year.David L. Ryan/Globe Staff

Constellation on Friday said the National Grid contract, along with “others that we hope to soon finalize,” will help ensure the Everett Marine Terminal, as the facility is known, continues to supply natural gas to New England, particularly on the coldest winter days. Constellation urged an expeditious review by DPU to help protect 60 jobs at the terminal and provide natural gas and reliable electricity “that is needed during this region’s transition to clean energy.”

Then on Saturday, an Eversource spokesman confirmed that his company would be filing its own contracts on Monday with the LNG terminal for DPU approval. While he didn’t share the details, he provided a corporate statement saying these contracts are essential to ensuring reliability during the coldest times of the year, while serving “as a bridge to the clean energy future.”

Dan Dolan, head of the New England Power Generators Association, praised the National Grid deal, saying it marks the end of electric ratepayer subsidies for the Mystic plant and it ensures that Mystic, the largest fossil fuel-fired power plant in New England, retires on time as planned. While Dolan said the regional electric grid’s power plants can maintain fuel reliability without needing the LNG, it became clear that some steps needed to be taken to protect heating customers.

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Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.