By Mark Jaffe, EUCI energy writer
Facing uncertainty and financial risks over the potential impact of tariffs on Canadian electricity imports, New England and New York grid operators are seeking permission from federal regulators to add a surcharge to cover import duties.
ISO New England said in a filing to the Federal Energy Regulatory Commission (FERC) that it needs a cost-recovery mechanism in place even though it is unclear when the proposed 10% tariff would be imposed.
“Failure to have a cost-recovery mechanism in place prior to the effective date of a Canadian import tariff would place the ISO at risk of noncompliance with a federal obligation and, in a worst-case scenario, could force the ISO to seek bankruptcy protection,” the grid operator said.
ISO New England operates the grid for Connecticut, Massachusetts, Vermont, New Hampshire, Rhode Island, and Maine. It estimates that the duties could amount to more than $66 million a year.
The two largest importers in 2024 were Vermont with 3.9 terawatt-hours (TWh) and Maine with 2.3 TWh from Hydro-Québec, according to the Canadian Energy Regulator (CER). That was equal to about 9% of the grid’s total electricity.
The New York Independent System Operator (NYISO) was the largest single consumer of Canadian electricity in 2024 using a quarter of the total 30 TWh exported to the U.S., CER said.
“It is essential for the NYISO, and its customers, to have clarity on this issue because duties on Canadian electricity would likely amount to tens of millions of dollars per year,” the filing said.
Without the authority to recover those costs, the grid operator “could face severe adverse financial consequences,” the filing said.
In January, President Donald Trump issued an order for 25% tariffs on Canadian imports, but set a 10% rate on oil, natural gas, electricity, coal, uranium, and critical minerals. Trump has twice postponed imposing the tariffs, which are now set for April.
The United States and Canada have one of the world’s most integrated international electric grids, enabling the two countries to pool resources for improved reliability and economic efficiency, according to the NYISO.
NYISO is interconnected to Ontario’s Independent Electricity System Operator and Hydro-Québec.
For most of the last 20 years, Canada has been a net exporter of electricity to the U.S., although in 2023 when drought reduce hydropower generation, British Columbia imported 18% of its electricity from the U.S.
In general, imports and exports make up less than 1% of the countries’ respective total electricity generation. However, cross-border trade is an important grid-balancing mechanism, the U.S. Energy Information Administration said.
While the U.S. imported 30 TWh worth $1.9 billion in 2024, Canda imported 20 TWh of U.S. electricity valued at $1.2 billion.
ISO New England said in its FERC filing that it is unclear how any duty would be imposed since the terms and rates need to be published in the U.S. International Trade Administration’s tariff schedule, which is often accompanied by regulatory guidance on calculating payments.
“As each of these steps has not yet occurred, there are significant open questions as to whether, and if so, how, a tariff would be imposed upon imports of electricity into the ISO-administered markets and the basis of any applicable import duty,” the grid operator said.
Electricity could become a casualty in a U.S.-Canada trade war as Ontario Premier Doug Ford has vowed to shut down electricity exports from his province if the Trump administration goes ahead with the tariffs.
“They rely on our energy, they need to feel the pain,” Ford said at a March 3 mining convention in Toronto. “They want to come at us hard? We’re going to come back twice as hard.”
“We keep the lights on in 1.5 million homes and manufacturers in New York, Michigan, and Minnesota,” Ford told NBC News the same day. “If he wants to destroy our economy and our families, I will shut down the electricity going down to the U.S. and I’m telling you, we will do it. It’s unfortunate. I would rather ship you more electricity, more energy.”
Processing…please wait
