Key Update:
Grid operators and energy system regulators in the northern United States are working closely with their counterparts in Canada to address a forthcoming 10% tariff on electricity imports from Canada, which is expected to be implemented next month.
Ontario Premier Doug Ford and British Columbia Premier David Eby have warned that they may restrict electricity exports from their provinces if the tariffs take effect, according to a recent report from S&P Global.
ISO New England has indicated its commitment to maintain reliable grid operations. A spokesperson noted their focus on ensuring system reliability in light of the potential tariff changes. Similarly, a representative from New York’s Department of Public Service mentioned that they are monitoring the situation closely, emphasizing the need to provide New Yorkers with a reliable and affordable energy system.
Background Insight:
The recent announcement from the Trump administration included the 10% tariff on Canadian electricity as part of a larger set of duties affecting imports from both Canada and Mexico. The decision came amid a temporary pause on these tariffs that was announced on February 3.
In January, the administration proposed a lower tariff rate on Canadian energy commodities than the broader 25% duties applied to most imports from its North American neighbors.
Since 2018, the U.S. has generally been a net importer of Canadian electricity. However, trade patterns briefly changed in 2024 due to a decline in Canadian hydropower exports linked to drought conditions, which affected overall electricity trade.
Although the volume of electricity imports and exports represents a small fraction of total electricity generation in both countries, this cross-border trade plays a crucial role in balancing the grid and ensuring a consistent energy supply, particularly during times when hydropower generation in Canada is low.
In 2024, Canadian power exports generated approximately $1.79 billion in net revenue, accounting for significant shares of total electricity production in provinces like Manitoba, Ontario, and Quebec. The province of British Columbia sourced 18% of its electricity from the United States due to reduced hydropower output from local droughts, which also led to a spike in electricity prices.
Electricity imports are especially vital for the grids in New York and New England, with New England relying on Canadian imports for 9% of its electricity supply. In 2024, New York imported around 8.8 million MWh from Canadian suppliers.
The implementation of the 10% tariff raises concerns about the reliability and resource availability for the northeastern grids, particularly during periods of high energy demand.
The performance of the New England grid was notably impacted during a recent cold snap, leading to an abnormal increase in oil-burning generation resources due to the peak demand of 19,600 MW. Meanwhile, Canadian electricity imports saw significant increases during this time as competition for natural gas supply surged.
ISO New England and the New York Department of Public Service have not commented specifically on how they plan to manage extreme weather events in light of these developments, though they indicated ongoing communication with Canadian power operators to ensure grid stability.